US: Homebuilding appears set for a solid year - Wells Fargo

US Housing starts fell 8.2% in December to a 1.192 million unit pace. According to analysts from Wells Fargo, starts had surged in the prior month due to unseasonably mild weather and some bounce back from hurricane disruptions.

Key Quotes: 

“December’s 8.2 percent pullback in housing starts appears to be nothing more than the typical winter volatility. Residential construction tends to pull back as winter approaches, so anything outside the norm tends to have a disproportionate impact on the reported figures.”

“December’s pullback was entirely in single-family starts, which tumbled 11.8 percent. Multifamily starts rose 1.4 percent on the month. With the December data we now have our first look at 2017 as whole. Overall starts rose 2.4 percent to a 1.202 million unit pace. Single-family starts rose 8.5 percent, while multifamily starts fell 9.8 percent. The data will be revised in coming months.”

“Housing permits fell just 0.1 percent in December and ended the year at a 1.302 pace, which is well above the most recent level of starts. Permits for new single-family homes rose 1.8 percent in December, while permits for new multifamily projects fell 3.9 percent. The permit data show a great deal of strength toward the end of the year. Overall permits averaged a 1.307 million unit pace, which is 4.5 percent stronger than overall starts.”

“The strength in permits relative to starts suggests homebuilding will ramp up once the weather warms up. Starts rose at a 29.7 percent pace in the fourth quarter, while permits surged at a 25.5 percent pace.”