Housing starts surged unexpectedly in November, rising to a 6-month high.
New home construction increased by 14.8% last month to an annualized rate of 1.56 million, according to data from the U.S. Census Bureau. All regions saw increases, with the South experiencing a 16.3% boost while new construction doubled in the Northeast.
Single-family starts soared by 18.0% to a seasonally adjusted annual rate of 1.143 million, their highest level since April 2022.
Permit applications slipped 2.5%, however, to a seasonally adjusted annual rate of 1.46 million. Permits offer an indication of future construction.
Notably, the decline was driven by multi-family construction only. Permits for single-family residences actually rose to their highest level since May 2022.
The data offers good news heading into the new year, as many analysts expect the housing market to accelerate in 2024.
Fannie Mae recently predicted that the single-family market bottomed out in Q4 2023 and will begin “a slow but meaningful recovery over the course of the next year.”
Inventory factors heavily into that calculation, as current stock shortages have contributed to soaring home prices and record-low affordability.
Builders are feeling confident at year-end, with ongoing inventory problems providing ample opportunity to sell new homes. Builder confidence rose in December.
“With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look,” NAHB Chairman Alicia Huey said in a statement. “With the nation facing a considerable housing shortage, boosting new home production is the best way to ease the affordability crisis, expand housing inventory, and lower inflation.”
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