WASHINGTON — U.S. builders started work on homes in December at the fastest pace in 41/2 years and 2012 was their best year for residential construction since the early stages of the housing crisis.
The Commerce Department said Thursday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That's 12.1 percent higher than November's annual rate and nearly double the recession low reached in April 2009. Construction increased last month for both single-family homes and apartments.
For the year, builders started work on 780,000 homes. That's still roughly half of the annual number of starts consistent with healthier markets, but it is an increase of 28.1 percent from 2011 and the most since 2008 — shortly after the housing market began to collapse in late 2006 and 2007.
Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped boost sales and prices in most markets. That has persuaded builders to start more homes, which adds to economic growth and hiring.
"There is no denying that the housing market recovery is solidifying, and we expect construction activity to ramp up to the 1 million annualized threshold by the end of this year," said Michael Dolega, an economist with TD Economics, in a note to clients.
Dolega said the gains in home building helped boost construction hiring in December by 30,000 jobs — the most in 15 months. He predicts the construction industry could add 500,000 jobs in 2013.
In December, the pace of single-family home construction, which makes up two-thirds of the market, increased 8 percent. While that's well below healthy levels, single-family housing starts are now 75 percent above the recession low of March 2009.
Apartment construction, which is more volatile, surged 23 percent last month. It is now back to prerecession levels.
Applications for building permits, a sign of future construction, inched up to a rate of 903,000 — the highest level since July 2008.
"The strong rise in single-family starts is a clear indication of builder confidence in the sales outlook," said Pierre Ellis, an economist at Decision Economics, in a note to clients.
In November, sales of previously occupied homes rose to their highest level in three years, while new home sales reached a 21/2-year high.