A report released by the Commerce Department on Wednesday showed a sharp increase in new residential construction in the U.S. in the month of December.
The Commerce Department said housing starts spiked by 6.2 percent to an annual rate of 1.404 million in December after jumping by 3.9 percent to an annual rate of 1.322 million in November. Economists had expected housing starts to come in at an annual rate of 1.33 million.
The continued surge by housing starts partly reflected a significant increase in multi-family starts, which soared by 11.3 percent to an annual rate of 423,000 in December after rising by 0.5 percent to an annual rate of 380,000 in November.
Single-family starts also shot up by 4.1 percent to an annual rate of 981,000 in December after surging by 5.4 percent to an annual rate of 942,000 in November.
The Commerce Department also said building permits jumped by 4.3 percent to an annual rate of 1.448 million in December after slumping by 1.6 percent to an annual rate of 1.388 million in November.
Building permits, an indicator of future housing demand, were expected to come in at an annual rate of 1.400 million.
The report showed multi-family permits led the way higher, spiking by 15.2 percent to an annual rate of 567,000 in December after plunging by 7.7 percent to an annual rate of 492,000 in November.
Meanwhile, single-family permits slumped by 1.7 percent to an annual rate of 881,000 in December after jumping by 2.1 percent to an annual rate of 896,000 in November.
“We expect a gradual improvement in housing starts over the course of 2026 but that won’t be apparent immediately,” said Nancy Vanden Houten, U.S. Lead Economist at Oxford Economics.
She added, “January starts are likely to be weaker than the December reading due to the severe winter weather that affected much of the country.”
The National Association of Home Builders released a separate report on Tuesday showing homebuilder confidence has unexpectedly seen a modest deterioration in the month of February.
The report said the NAHB/Wells Fargo Housing Market Index edged down to 36 in February after slipping to 37 in January. Economists had expected the index to inch up to 38.
With the unexpected dip, the housing market index dropped to its lowest level since hitting 32 last September.
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