November Housing Starts at 10-Year High

Housing starts rose for the second straight month, rising by 3.3 percent in November to a 10-year high, HUD and the Census Bureau reported yesterday.

The report said privately owned housing starts in November rose to a seasonally adjusted annual rate of 1.297 million, 3.3 percent higher than the revised October estimate of 1.256 million and nearly 13 percent higher than a year ago (1.149 million).

Single-family housing starts in November rose by 5.3 percent to 930,000; the November rate for units in buildings with five units or more rose to 359,000, up by 0.8 percent from 356,000 in October and up by 11.1 percent from a year ago.

Regionally, strong gains in the South and West to their highest rates in 10 years more than offset declines in the Midwest and Northeast. In the South, starts rose by 11.1 percent to 691,000 units, seasonally adjusted, in November from 622,000 in October and rose by nearly 19 percent from a year ago. In the West, sales jumped by 19 percent to 344,000 units in November from 289,000 in October and improved by nearly 28 percent from a year ago.

In the Midwest, starts fell by nearly 13 percent in November to 175,000 units from 201,000 in October and fell by 19 percent from a year ago. In the Northeast, starts fell by nearly 40 percent to 87,000 units in November from 144,000 in October but improved by nearly 5 percent from a year ago.

“Revisions post-storm pushed the bulk of building activity into November,” said Mark Vitner, senior economists with Wells Fargo Securities, Charlotte, N.C. “The building trend is clearly on the rise, particularly compared with earlier this year. Solid readings for both October and November bode well for Q4 GDP growth.”

“The year-over-year increase in housing starts is good news for the housing market, as starts are the source of future completions, meaning an increasing amount of new housing supply is on the way,” said Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif. “Housing completions have just begun to keep up with new household formation this past quarter. While new household formation has remained relatively steady, the past two quarters have seen an increase, specifically a shift from renter-occupied to owner-occupied households, as millennials age into homeownership.”

The report said privately owned housing units authorized by building permits in November fell by 1.4 percent to 1.298 million from 1.316 million in October. Single-family authorizations in November rose to 862,000, 1.4 percent higher than October. Authorizations of units in buildings with five units or more were unchanged in November at 395,000.

Privately owned housing completions in November fell by 6.1 percent in November to 1.116 million, seasonally adjusted, from October’s revised 1.189 million and fell by 7.2 percent from a year ago. Single-family housing completions in November fell by 4.6 percent to 720,000 from October’s revised 788,000; the November rate for units in buildings with five units or more was 350,000, down by 10.4 percent from October (394,000) and down by 17.1 percent from a year ago.

“While housing completions decreased this month, the increase in housing starts will be good news for future completions, signaling some relief for the supply shortage in 2018,” Fleming said.