Home starts top forecasts, permits highest since 2007
Construction of new homes increased more than forecast in November and permits to build climbed to a 12-year high as the housing market strengthened amid low mortgage rates, solid job growth, and optimistic buyers and builders.
Residential starts rose 3.2% to a three-month high 1.37 million annualized rate after an upwardly revised 1.32 million pace in the prior month, according to government figures released Tuesday. Permits, a proxy for future construction, increased 1.4% to an annualized 1.48 million pace. Stocks and the dollar rose after the report and another that showed stronger-than-expected factory output in November.
The data indicate residential construction may add to fourth-quarter growth after contributing in the previous quarter for the first time since the end of 2017. Demand has been fueled by mortgage rates near a three-year low as the job market remains resilient and wage gains help put money into the pockets of potential homebuyers.
Construction of one-family homes rose to the highest since January, while permits for those dwellings increased to the highest level since July 2007.
The positive reading corroborate other housing data. Homebuilder sentiment soared to a 20-year high in December. The latest consumer sentiment gauge from the University of Michigan also showed an index measuring home-buying conditions rose to a five-month high in December. Upcoming data this month are forecast to show existing-home sales, which comprise the vast majority of transactions, and new-home purchases were little changed in November.
Groundbreakings for the multifamily category, which tends to be volatile and includes apartment buildings and condominiums, increased to a three-month high while permits also rose.
The median forecast in a Bloomberg survey of economists called for starts to rise to a 1.35 million pace from a previously reported 1.31 million in October.
Two of four regions posted a gain in starts, led by a jump in the South to the fastest pace since March 2007. Starts in the West also advanced.
About 188,000 homes were authorized but not yet started, the most since February, indicating a growing backlog for homebuilders.
The report, produced jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, has a wide margin of error, with a 90% chance that the headline figure was between a 6.8% decline and a 13.2% increase.