As per the data released on Friday, U.S homebuilding climbed significantly in December marking the best in the previous 13 years. The recovery hinted at the housing market in the United States getting back on track due to the low mortgage rates. As per the analysts, Friday’s data further supports the continuation of the economic expansion that has recently been branded the longest recorded in American history.
U.S Homebuilding Jumped 16.9% In December
In terms of figures, housing starts were recorded at an annual rate of 1.608 million units (seasonally adjusted) in December that marked a 16.9% jump and was highlighted as the best figure since December 2006. The percentage gain, on the other hand, was recorded as the widest since October 2016. Homebuilding was previously recorded at 1.365 million units in November. The data for November, however, was also revised and upgraded to 1.375 million units on Friday. Analysts were expecting housing starts to print at 1.38 million units for December. Friday’s report, however, beat the analysts’ estimate and fueled the U.S dollar index slightly higher later in the day.
On a year over year basis, December’s housing starts posted a 40.8% increase. With 1.290 million units having started last year, 2019’s data was 3.2% up as compared to that of 2018. Building permits, on the other hand, saw a sharp decline of 3.9% in December. At 1.416 million units in December, the figure was significantly lower as compared to November when the data was reported to have hit its best level in over 12 years.
Freddie Mac Says Lower Interest Rates Helped Boost The U.S Housing Market
As per Freddie Mac, a renowned mortgage finance agency, the momentum in the U.S housing market has picked up following three consecutive rate cuts from the U.S Federal Reserve in 2019. The agency further stated that the average 30-year fixed mortgage rate has declined from November 2018’s high of 4.94% to 3.65% in the last month.
The housing market currently contributes to 3.1% of the U.S economy. While residential investments remained under pressure for six consecutive quarters, a considerable improvement was noted in 2019’s third quarter. Stepping out of the longest streak of contraction in the residential sector since the period of recession (2007-2009), analysts are expecting such investments to extend the boost in the fourth quarter as well.
The forex market responded modestly to the economic data on Friday with EUR/USD dropping from around 1.1115 level to around 1.1085.