U.S. housing starts rise in November, gains likely to remain modest

Housing starts in the U.S. rose in the month of November. Starts rose 3.2 percent to 1.26 million from a downwardly revised 1.22 million in October. The rise was limited to the volatile multi-family segment that rose 22.4 percent to 432k units. Single-unit starts fell for the third straight month. The median consensus forecast was for starts to stay unchanged.

Meanwhile, building permits also rose in the month, rising 5 percent to 1.33 million from October’s print of 1.27 million. Single and multi-family permits rose 0.1 percent and 14.8 percent, respectively. The regional outturn was split, with starts rising 37.8 percent in the Northeast and 15.1 percent in the South, while falling 19.2 percent in the Midwest and 14.2 percent in the West.

The data for November possibly reflects the effect of many weather related phenomena that have changed building patterns, noted TD Economics in a research report. As anticipated, rebuilding efforts in the aftermath of Hurricanes Florence and Michael added to the sharp rise in the activity in the South – where both single and multi-family starts rose on the month. However, in the West, where the fall was concentrated in the single-family segments, this might show the effect of wildfires in California that has depressed homebuilding activity.

“November's outturn, while welcomed, was concentrated in the multi-family segment, which has a more limited contribution to overall economic activity. Given the headwinds facing the industry (lack of buildable lots and skilled labor along with rising mortgage rates), we expect gains to remain modest”, added TD Economics.

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