- Brian Jones, a senior U.S. economist at Societe Generale
US housing starts soared more than expected in December, reaching the highest level in more than six and a half years. Groundbreaking for single-family homes surged 4.4% to a seasonally adjusted annual rate of 1.09 million units, according to the Commerce Department. November's housing starts were also revised up to 1.04 million units. Construction started on new US homes advanced 8.8% to 1.01 million units in 2014 from the previous year, which is the highest level since 2007. However, total starts still remain far below an average pace of about 1.5 million over the 20 years leading up to the housing bubble's 2006 high. Housing has restrained an economic growth acceleration as sluggish wage gains put off first-time buyers from the market and force many young people to stay at home with parents or share accommodation with relatives and friends. However, strengthening labour market, low mortgage costs as well as improving consumer confidence will probably boost demand for residential real-estate. Faster wage gains and easier credit would help spur the housing recovery, benefiting sales and profits at builders. The number of building permits, however, dropped unexpectedly in the reported month. The Commerce Department said that permits issued last month fell by 1.9% to a seasonally adjusted 1.032 million units, down from November's 1.052 million. Analysts, in contrast, had expected building permits to climb 1.3% to 1.055 million units in December. Permits have been above a 1 million-unit pace since July.
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