There was a rebound in the construction of new homes in December, making 2014 the most active year in new home construction since the housing boom nine years ago.
The US Commerce Department announced that starts on single-family homes and apartments increased by 4.4 percent to a rate of 1.043 million in December.
Builders started 8.8 percent more homes in 2014 compared to 2013, with construction on 1.01 million new homes and apartments during the year.
This means that 2014 is the first year that housing starts have topped 1 million since 2005, when the housing boom was at its height and builders started work on 2.07 million homes.
Construction of single-family homes rose by 7.2 percent in December, while the smaller apartment sector fell 0.8 percent.
Applications for building permits fell by 1.9 percent in December to 1.03 million compared to a 3.7 percent drop in November. Despite the number of applications being somewhat weak, economists forecast continued momentum in home construction this year, given rising employment and a more favorable economic environment.
The National Association of Home Builders/Wells Fargo builder sentiment index dropped in January to 57, which is lower than the 58 reading in December. All readings over 50 indicate that builders consider sales conditions to be good instead of poor.
Broader factors also indicate that 2015 will be a good year for home starts and sales. The unemployment rate dropped in December to 5.6 percent, the lowest level in over 6 years, with 3 million jobs created last year.
In addition, mortgage rates are at near record lows. The 30-year fixed rate mortgage has fallen by 3.66 percent, dropping for third consecutive week, to its lowest level since May 2013.
