WASHINGTON (AP) — Construction of new homes surged in December to the highest level in 13 years, capping a year in which falling mortgage rates and a strong labor market helped lift the prospects of the housing industry.
The Commerce Department reported Friday that builders started construction on 1.61 million homes at a seasonally adjusted annual rate in December, up 16.9% from the November pace of home building.
Housing construction has been rising since July, helped by falling mortgage rates and increased demand as the unemployment rate approached a half-century low. For the year, builders started work on a total of 1.29 million homes, the best showing since 2007.
The December building rate was the strongest number since December 2006 during the last housing boom.
Applications for building permits, considered a good sign of future activity, fell 3.9% in December to an annual rate of 1.42 million, but remained well above the pace in July.
Construction of single-family homes rose 11.2% to an annual rate of 1.06 million homes last month while apartment construction fell 9.6%.
The 1.29 million units constructed for all of 2019 was up 3.2% from the previous year and was the best showing since 1.36 million homes were built in 2007. As the housing boom was reaching its peak, construction was started on a total of 2.07 million homes in 2005, the highest total for any year in that boom.
U.S. industrial production fell 0.3% in December, as unseasonably warm weather reduced demand for heating from utilities.
The Federal Reserve said Friday that total industrial production — which includes the manufacturing, mining and utilities sectors — slumped 1% over the past year. Factory output has tumbled 1.3% from a year ago, driving much of the overall decline as manufacturers grappled with trade disputes and slower global growth in 2019.
Still, factory output improved 0.2% in December as the metal, wood product, computer and food and beverage sectors improved. Output at auto plants fell 4.6% in December after a November surge following the end of the General Motors strike.
Mining output increased 1.3% last month because of gains in extracting oil and natural gas.
After an unseasonably cold November, temperatures in December nationwide were 36.5 degrees Fahrenheit, or 3.8 degrees above the 20th Century average, according to the National Oceanic and Atmospheric Administration. The government agency estimated that energy demand during December was 56 % below average.