Single-family housing starts rise to highest level in a decade
Groundbreaking on single-family homes proceeded in November at the strongest pace in a decade, driving housing starts to a faster-than-estimated rate, government figures showed Tuesday.
Residential starts rose 3.3% to a 1.3 million annualized rate (the estimate was 1.25 million) after a 1.26 million pace in the prior month (revised from 1.29 million). Single-family starts jumped 5.3% to 930,000, the highest since September 2007. The South and West regions also were at 10-year highs. Permits, a proxy for future construction of all types of homes, fell 1.4% to a 1.3 million rate (the estimate was 1.27 million) from a 1.32 million pace; single-family permits in the U.S. and South were both at their highest level since August 2007.
The latest results make it more likely that residential construction spending — which subtracted from economic growth in the second and third quarters — will add to the pace of U.S. expansion in the October-December period, which is already shaping up as a solid quarter.
The November gains are encouraging because they're driven by single-family homebuilding, which tends to spur economic activity and jobs in a bigger way than apartment construction. Single-family permits have increased for three straight months, also indicating a sustained pipeline of work for developers.
The figures reflect a boost from rebuilding and recovery efforts following Hurricanes Harvey and Irma, as areas in the South had faced the brunt of the damage from flooding and winds.
A separate report on Monday showed homebuilders' confidence jumped in December to the highest level since July 1999, indicating developers expect demand to advance amid steady economic growth, a tightening job market and still-low mortgage costs. At the same time, further gains in homebuilding may run up against hurdles including a shortage of workers, rising costs for materials and a scarcity of ready-to-build lots.
Groundbreaking on multifamily homes, such as apartment buildings and condominiums, fell 1.6% to an annual rate of 367,000; data on these projects can be volatile. Housing starts plunged 40% in the Northeast to 87,000, the biggest drop in a year and were down 13% in the Midwest. The report shows a wide margin of error, with a 90% chance that the November figure on housing starts was between a 5.8% drop and a 12.4% gain.
Housing units authorized but not yet started reached 155,000, the most since June 2008; and homes under construction increased to 1.11 million, the most since August 2007. The report was released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.