Building permits up 3.6%; single-family permits ease 0.2%
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Construction on new U.S. homes fell 3% in November to a seasonally adjusted annual rate of 861,000, led by declines in the West and Northeast, the Commerce Department reported Wednesday.
Economists polled by MarketWatch had expected housing starts to fall to a rate of 865,000. See economic calendar.
The U.S. starts rate for October was downwardly revised to 888,000 from a prior estimate of 894,000.
Starts for November fell by 19.2% in the West and by 5.2% in the Northeast, while rising 2.9% in the South and 3.3% in the Midwest.
Meanwhile, building permits, a sign of future demand, rose 3.6% last month to a rate of 899,000. Permits for single-family homes ticked down 0.2% to a rate of 565,000, while permits for structures with at least two units jumped 10.6% to a rate of 334,000.
Despite the decline in November, U.S. starts have gained 22% over the last 12 months. Still, current rates remain far below a bubble peak of nearly 2.3 million in 2006.
Other recent housing data have also shown a sector that is gaining strength but that still has far to go.
A gauge of confidence among home builders rose in December to the highest level since April 2006, with respondents encouraged by declining inventory and good sales conditions, according to a report released Tuesday. Read more about builder confidence.
Indeed, an exchange-traded fund of home builders ITB +2.09% has all but doubled over the past 12 months.
However, new construction of single-family homes remains below levels historically associated with current levels of sentiment among builders.
Also, despite the improving builder sentiment, the nation’s housing sector still faces challenges from strict lending conditions, even as mortgage rates hover near record lows, and a persistently high unemployment rate. There are also concerns about shadow inventory.
Ruth Mantell is a MarketWatch reporter based in Washington. Follow her on Twitter @RuthMantell.
