Privately-owned housing starts in the U.S. declined by 3% to an annualized pace of 861,000 units in November following the cumulative 22% increase seen over the previous three months that put home building activity to a four-year high of 888,000 in October (downwardly revised from the initially reported 894,000). Some moderation in starts in November had been anticipated due the impact of Hurricane Sandy, although market expectations going into the report were for a more modest decline to 872,000 annualized units.
The more modest pace of new home construction in November reflected a 4.1% decline in the single-unit starts to 565,000 annualized units, while multiple-unit starts moderated by 1.0% to 296,000. Regionally, while some pullback in activity was seen in the Northeast (-5.2%), the region most impact by Hurricane Sandy, the bulk of the decline in November was concentrated in the West (-19.2%) where both single and multiple-unit starts saw sharp declines in the month (down 15.4% and 28.1%, respectively). Modest increases in starts were record in the Midwest (+3.3%) and South (+2.9%) to temper the overall decline.
Building permits, in contrast, rose 3.6% in November to 899,000 annualized units, their highest level since July 2008. The increase reflected a 10.6% jump in permits for multiple-unit residences that largely reversed the 11.2% decline recorded in the previous month. Permits issued for single-unit homes edged down to 565,000 in November from 566,000 in the previous month.
Even with the modest pullback in homebuilding activity recorded in November, the average level of starts so far through Q4 stands an annualized 63% above that seen in Q3. Furthermore, with homebuilder sentiment rising to a six-year high in December and building permits holding at elevated levels, experts say the stage appears to be set for starts to continue to pick up steam into 2013.
RBC Economics says, "the continued improvement in housing market conditions supports our view that residential investment will provide support to overall economic growth over the forecast horizon."
