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November saw housing starts surge to the highest level since May, significantly beating out expectations.
Housing starts, representing the number of houses on which construction began, jumped 14.8 percent between October and November to a seasonally adjusted annual rate of 1,560,000 according to data released Tuesday by the United States Census Bureau and the Department of Housing and Urban Development. Housing starts were 9.3 percent higher than they were in December 2022.
The positive construction news follows a report on Monday that builder sentiment improved for the first time in four months on the back of lower mortgage rates breathing some life into the stagnant housing market.
“Home builders saw some renewed spirit in the market in November, with confidence rising from October lows, likely leading to the rise in housing starts,” Zillow Senior Economist Nicole Bachaud said in a statement. “It is a good sign that builders are starting to ramp back up building activity with a market still in desperate need for more inventory.”
The number of multifamily units going under construction increased by 6.9 percent month over month to an annual pace of 417,000, but was down a staggering 33.7 percent from a year earlier.
The number of housing units authorized by building permits dropped 2.5 percent between October and November to a seasonally adjusted annual rate of 1,460,000, which was 4.1 percent above the November 2022 rate of 1,402,000, according to the Census Bureau. While permits were down month over month, November was the first time in 14 months that they were up on an annual level.
“This increased activity in new construction is vital for getting back on track for a more balanced market,” Bachaud said.
The rate of housing completions jumped 5 percent from October to a seasonally adjusted annual rate of 1,447,000, which was 6.2 percent below the levels seen a year prior.
Housing experts ascribed the upward trend in housing construction to recent declines in mortgage rates, with pent up housing demand beginning to be unlocked gradually — but the construction sector still faces many hurdles, they noted.
“Lower interest rates and a lack of resale inventory helped to provide a strong boost for new home construction in November,” said Alicia Huey, chairman of the National Association of Home Builders. “And while these higher starts numbers are consistent with our latest builder survey, which shows a rise in builder sentiment and future sales expectations, home builders continue to contend with elevated construction and regulatory costs.”
