U.S. Housing starts rose to fastest pace since 2006 in December

U.S. home construction starts rose in December 2020 to the best pace since late 2006 as builders responded to the robust demand for single-family housing.

Residential starts climbed by 5.8% to a 1.67 million annualized rate, according to government data. That topped all estimates in a Bloomberg survey of economists that had a median forecast of 1.56 million and compared with an upwardly revised 1.58 million rate in November.

The figures are the latest sign of the housing market’s strong rebound. The Federal Reserve’s ultra-easy monetary policy has helped push mortgage rates to record lows that are attracting more potential home buyers and underpinning historically strong demand.

Meanwhile applications to build, a proxy for future construction, increased 4.5% in December to a 1.71 million annualized rate that was also the best since 2006.

The pandemic has also driven a surge in demand for larger properties with more space for families to work and learn at home. With lean inventories, builders have been rushing to meet demand. A measure of homebuilder sentiment eased in January, but remains near a recent record.