Dive Brief:
- Housing starts surged 10.5% in November to a 1.17 million annualized rate, up from a 1.06 million rate in October, the Commerce Department reported Wednesday. November starts were 16.5% higher than in November 2014.
- New applications for building permits, a predictor of future construction activity, rose 11% last month to the highest rate since June.
- Multifamily housing starts led November's gains, as the segment saw an increase of 18.1%. Single-family also had an impressive showing, with a 7.6% bump in November.
Dive Insight:
Starts in November surpassed predictions, as economists surveyed by The Wall Street Journal had forecast a rate of 1.14 million.
The strong results were a welcome reprieve after the steep decline in housing starts in October, when new home construction plummeted 11%. November's report is "the latest sign the housing market is gaining momentum despite the prospect of higher mortgage rates," The Journal noted.
The Commerce Department report comes the day after the National Association of Home Builders reported homebuilder confidence dipped one point in December to a score of 61, but still remained in positive territory.
Despite concerns from some homebuilders and housing market analysts that an impending Federal Reserve interest rate hike — the first of which is expected to occur today — would deter customers from purchasing a new property, a Zillow report this week found 70% of the potential homebuyers surveyed would not change their plans to buy a home, even if mortgage interest rates rise to 4.5%.
The housing starts data will be followed by reports on existing home sales on Dec. 22, new home sales on Dec. 23, and pending home sales on Dec. 30.
