Housing activity was robust throughout 2019 as home sales and prices continued to rise while inventory levels declined.
New home sales increased 10.3% in 2019 likely due to a combination of low unemployment, rising wages, attractive mortgage rates and increases in household formations (i.e., millennials entering the housing market) while existing home sales were sluggish most of the year, but increased at a seasonally adjusted annual rate of 10.8% in December.
Housing starts and building permits posted gains of 3.2% and 3.9%, respectively, in 2019. Most notably, December’s seasonally adjusted annual rate of 1.608 million housing starts was a 40.8% year-over - year increase and the highest level since December 2006.
Multifamily starts were up 7.8% while single-family starts were up 1.4% in 2019, representing the second consecutive year that multifamily starts outpaced single-family starts.
Remodeling activity remains strong likely due to the upward trajectory of home prices, strong consumer confidence and a robust economy with steady job and wage growth. However, remodeling growth may slow considerably in the second half of 2020 primarily due to a projected softening in existing home sales and rising labor and material costs.
Strong demand and low inventory levels drove home prices higher in all markets in 2019, with all cities in the 20-City Index notching gains on a year-over-year basis.
Finally, the performance of stock market indices for homebuilders, building product manufacturers and building products distributors outperformed the S&P 500 Index over the past 12 months, reflecting investor confidence in the near-term future of the industry.