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November Housing Starts

December 19, 2017
By Robert A. Dye, Ph.D., Daniel Sanabria

November Housing Starts
Single-Family Construction Boosts Starts

  • Housing Starts increased by 4.8 percent in November to a 1,297,000 unit annual rate.
  • Residential Construction Permits decreased by 1.4 percent to a 1,298,000 unit pace in November.
  • National Association of Home Builders says builder confidence increased in early December.

Total housing starts increased by more than expected in November on the strength of single-family construction. Starts increased by 3.3 percent for the month, to hit a 1,297,000 unit annual rate. Single-family housing starts increased by 5.3 percent in November, reaching a 930,000 unit annual rate. Although still tame by historical standards, November was the strongest month for single-family starts this side of the Great Recession. Multifamily construction metrics are weaker. Multifamily starts fell by 1.6 percent in November, to a 367,000 unit annual rate. This is well below the peak 507,000 unit rate from June 2015. Total permits eased by 1.4 percent, to a 1,298,000 unit pace. Permits for single-family construction gained 1.4 percent, while multifamily permits dipped by 6.4 percent in November.

The trend in multifamily construction still looks soft. Many markets were overbuilt by 2016, resulting in weaker rent growth in 2017. Total residential construction activity remains subdued compared to previous business cycle peaks. On the one hand, the push from housing in this business cycle has been weak. On the other hand, the subdued market still has room to run, especially on the single-family side. Looking ahead, there is a complex mix of positives and negatives for the residential construction industry in 2018. We expect to see higher mortgage rates in 2018 as the Federal Reserve continues to tighten monetary policy. The new tax plan, which may receive final congressional approval this week, will cap deductions to mortgages below $750,000. Pluses for housing include a strong labor market and high consumer confidence. We expect to see the single-family market continue to make moderate gains in 2018.

The National Association of Homebuilders says builder confidence in the single-family market increased in early December. According to the NAHB, builder confidence increased in 2017 on hopes of an improvement in the regulatory environment.

Market Reaction: Stock indexes were down. The yield on 10-year Treasury bonds is up to 2.44 percent. NYMEX crude oil is up to $57.42/barrel. Natural gas futures are down to $2.75/mmbtu.

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