U.S. Single-Family Housing Starts Rise to Highest in a Decade

Groundbreaking on single-family homes proceeded in November at the strongest pace in a decade, driving U.S. housing starts to a faster-than-estimated rate, government figures showed Tuesday.

Residential starts rose 3.3% to 1.3m annualized rate (est. 1.25m) after 1.26m pace in prior month (revised from 1.29m)
Single-family starts jumped 5.3% to 930,000, highest since Sept. 2007; South and West regions also were 10-year highs
Permits, a proxy for future construction of all types of homes, fell 1.4% to 1.3m rate (est. 1.27m) from 1.32m pace; single-family permits in U.S. and South both highest since Aug. 2007

Key Takeaways
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 home building, 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.

Other Details
Groundbreaking on multi-family homes, such as apartment buildings and condominiums, fell 1.6 percent to an annual rate of 367,000; data on these projects can be volatile
Housing starts plunged 40 percent in Northeast to 87,000, biggest drop in a year; down 13 percent in Midwest
Report shows wide margin of error, with a 90 percent chance that the November figure on housing starts was between a 5.8 percent drop and 12.4 percent gain
Housing units authorized but not yet started reached 155,000, the most since June 2008; homes under construction increased to 1.11 million, most since August 2007
Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington
Source: Bloomberg