Housing Starts Rise to Five-Month High in Broad Increase

New residential construction in the US rose to a five-month high in December, as homebuilders boosted production to take advantage of lower borrowing costs. Housing starts increased 6.2% to an annual pace of 1.4 million homes in December, according to figures released Wednesday by the government, which were delayed by fall’s federal shutdown. That beat all estimates in a Bloomberg survey. The advance was broad-based, with both single-family home starts and apartment projects rising at year’s end. The number of one-family homes started was the highest since February. Kamini Lane, President and CEO of Coldwell Banker Realty, joins Bloomberg Businessweek Daily to discuss. Lane also weighs in on this week's mortgage rate data, the current real estate market in cities like Los Angeles, and more. She speaks with Carol Massar and Tim Stenovec.  Red-state lawmakers are pushing legislation to reduce regulatory barriers to building more residential housing amid cost-of-living concerns, mirroring efforts underway in blue-state legislatures.

Republican state policymakers, especially in fast-growing Sunbelt states, say population growth is forcing them to find new ways to speed up housing construction. Florida GOP lawmakers are spearheading legislation that would require local governments to allow homeowners to build “granny units” — accessory dwelling units or smaller, independent homes on the same property as a single-family residence. An Arizona Republican has sponsored a measure that would provide fast-track permitting for workforce housing projects, hoping to find common ground with the state’s Democratic governor.

These efforts follow a Texas housing package signed last year by Gov. Greg Abbott (R) that allows for small lot development and building multifamily units in areas zoned for office, retail, or warehouse. Abbott noted the state — which added almost 400,000 residents last year — would “take every step necessary to improve housing supply and improve affordability.”

Almost 500 state housing-supply bills were introduced over the past year, said Josh Ferdelman, the program manager for the Urbanity Project at the Mercatus Center at George Mason University. Ten of those would limit local minimum lot-size requirements to allow for smaller homes. Roughly 30 bills across 13 states this year are aimed at allowing residential development in commercial spaces.

The proposals overlap with those in Democratic-controlled states — which have seen more modest or level growth. New York Gov. Kathy Hochul (D) has pitched an ambitious overhaul of the state’s environmental review process, while California Gov. Gavin Newsom (D) last year signed measures exempting many projects from the state’s landmark environmental review law.

Both parties are focusing on zoning limits, permitting delays, and land-use restrictions that are major cost drivers, housing researchers said, though Democrats have tended to add regulatory or affordability requirements.

“In the past, the differences between red- and blue-state housing policy were more pronounced than they are now,” said Alex Horowitz, director of housing policy initiatives at the Pew Charitable Trusts. “We’re seeing a lot more similarities today.”

That also is happening at the federal level. The House on Feb. 9 passed a measure by a 390-9 vote that would have the Housing and Urban Development Department issue best practices on zoning and design for local governments and expand affordable housing programs.

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