Housing Starts Rise for 1st Time Since August

Housing starts rose for the first time in three months, HUD and the Census Bureau reported yesterday, although multifamily accounted for most of the increase.

The report said privately owned housing starts in November came in at a seasonally adjusted annual rate of 1.256 million, 3.2 percent higher than the revised October estimate of 1.217 million, but 3.6 percent lower than a year ago (1.303 million). Single‐family housing starts in November fell to 824,000, 4.6 percent lower than October (864,000) and 13 percent lower than a year ago to their lowest level since March 2017. The November rate for units in buildings with five units or more jumped to 417,000, up by nearly 25 percent from October (334,000) and up by 20.2 percent from a year ago.

Regionally, results were mixed. In the South, starts jumped by 15.1 percent to 687,000 units, seasonally annually adjusted, in November from 597,000 in October and improved by 1.3 percent from a year ago. In the Northeast, starts jumped by nearly 38 percent to 124,000 units in November from 90,000 units in October and improved by 33.3 percent from a year ago.

In the West, however, starts fell by 14.2 percent to 289,000 units in November, seasonally annually adjusted, from 337,000 units in October and fell by 18.4 percent from a year ago. In the Midwest, starts fell by 9.5 percent in November to 156,000 units from 193,000 in October but improved by 8.1 percent from a year ago.

“Homebuilding activity in November was consistent with the less favorable builder sentiment readings we’ve seen in recent months, as builders are still challenged by several factors, including high input and labor costs,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “These results also likely reflect slower demand for new single-family homes, as emerging economic and financial market uncertainty, coupled with affordability challenges, are keeping some potential homebuyers away.”

“As the year comes to a close it seems appropriate to take a step back and take stock of what’s happened to housing supply this past year,” said Mark Fleming, Chief Economist with First American Financial Corp., Santa Ana, Calif.. “Looking ahead to 2019, single-family homebuilding will need to increase to keep pace with rising demand from the largest generation, millennials, as they enter their prime home-buying years.”

“While new single-family construction has clearly slowed in recent months, some of November’s weakness may be attributed to wildfires in California,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C. “The West saw a substantial 24.4% drop in single family starts, a pace well below recent history. Building permits in the West have also largely held up this year and have not seen such a dramatic drop-off.”

HUD/Census reported privately owned housing units authorized by building permits in November rose to a seasonally adjusted annual rate of 1.328 million, 5.0 percent higher than October (1.265 million) and 0.4 percent higher than a year ago (1.323 million). Single‐family authorizations in November rose slightly to 848,000; 0.1 percent higher than October (847,000). Authorizations of units in buildings with five units or more rose to 441,000 in November, up by 15.4 percent from October and up by 5.5 percent from a year ago.

The report said privately owned housing completions in November rose by 0.4 percent to 1.099 in November, seasonally annually adjusted, from October’s revised 1.095 million but nearly 4 percent below a year ago (1.144 million). Single‐family housing completions in November fell to 772,000, 5.4 percent lower than October (816,000). The November rate for units in buildings with five units or more rose to 314,000, up by 16.3 percent from October (270,000) but down by nearly 10 percent from a year ago.