Economics by Tile International
U.S. residential construction showed good health in 2019
Total new home starts grew by 3.2%, while new single-family home sales were at their highest level in twelve years: +10.3%.
As the U.S. economy experienced its tenth consecutive year of expansion last year (GDP was up 2.3%), residential construction continued to show its good health.
Total new home starts in 2019, which have risen each of the last ten years, were at their highest annual level since 2007 (1.29 million units, up 3.2% on 2018). Though still down considerably from the record high of 2.1 million starts in 2005, housing starts were more than double their level at the beginning of the decade. In February 2020, the National Association of Home Builders (NAHB), estimated new housing starts to rise 2% to 1.3 million units in 2020, with single-family starts’ comprising 920,000 units, and multifamily starts’ making up the remaining 383,000 units.
An additional measure of the residential market’s strength, new single-family home sales were at their highest level in twelve years. The 681,000 units sold in 2019 represented a robust 10.3% increase from the previous year. The NAHB predicts the upward trend will continue in 2020, with new single-family home sales’ reaching an annual total of 708,000 units.
Another good sign for the U.S. housing market was that foreclosure filings, a key inverse indicator of the residential market’s health, fell for the ninth straight year and were at their lowest level since tracking began in 2005. The 493,000 filings (0.36% of all U.S. housing units) recorded in 2019 reflected a 21.1% decline from the previous year.
The 30-year fixed mortgage rate was 3.94% last year, down from 4.54% in 2018. This represented the fourth lowest annual rate on record.
Last year, overall U.S. construction spending (including both private and public residential and non-residential construction) declined slightly year-over-year for the first time since 2011 and was at an estimated $1.3 trillion (-0.3%), but still at its second highest point on record.