Builders broke ground on more houses than forecast in December, capping the best year for the industry since 2008, another sign residential real estate is boosting the U.S. economic expansion.
Starts climbed 12.1 percent last month to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists and the most since June 2008, the Commerce Department reported today in Washington. For all of last year, construction began on 780,000 homes, up from 608,800 in 2011 and also the most since 2008.
Low borrowing costs and rising property values are spurring homebuyer traffic for the market that triggered the latest recession. Confidence among homebuilders such as Lennar Corp. is improving, even as tight credit remains an obstacle to further progress in residential real estate’s healing.
“The housing market’s in a decent recovery,” said David Sloan, a New York-based senior economist at 4Cast Inc., who projected a rise in starts to a 920,000 rate. “There is momentum continuing in the housing market recovery.”
Another report today showed the number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.
Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the fewest since January 2008, according to Labor Department figures. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey. A spokesman for the agency said the drop may reflect the difficulty the government has in adjusting the data following the holidays when seasonal workers are let go.
Stock-index futures added to earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.5% to 1,473.1 at 8:45 a.m. in New York.
The median estimate of 84 economists surveyed by Bloomberg called for an increase to 890,000. Projections ranged from 850,000 to 930,000. The prior month was revised down to an 851,000 pace from a previously reported 861,000 rate.
Building permits, a proxy for future construction, climbed less than starts, indicating the industry may take a breather in coming months. The number of applications issued climbed 0.3% in December to an 903,000 annual rate from a 900,000 pace in November. The reading was in line with the 905,000 median forecast of economists surveyed by Bloomberg.