Housing starts dropped 18.7% in November to a seasonally adjusted annual rate of 1.090 million from October’s upward-revised estimate of 1.340 million, the Commerce Department reported Friday. November’s figure is 6.9% behind the November 2015 rate.
Building permit authorizations, an indicator of future construction activity, dropped less dramatically, falling 4.7% from October’s upward-adjusted rate of 1.26 million and are 6.6% below the year-ago mark.
- Single-family starts were down 4.1% from October’s downward-adjusted mark of 863,000 but were still 5.3% above a year ago. Multifamily starts swung back after a strong October to report a 43.9% drop in November, 31.7% below the year-ago period.
November’s starts report was weaker than analysts had expected, with a Reuters poll forecasting starts to fall to a rate of 1.23 million to correct from October’s surge.
Still, builder confidence in the potential for single-family housing demand remains strong. The National Association of Home Builders/Wells Fargo Housing Market Index posted its highest mark since July 2005 in December with a score of 70. Current and future sales expectations also rose during the month, while buyer traffic jumped above the break-even market of 50 for the first time since October 2005.
Despite the drop-off in starts, November's report indicates that demand for housing is still strong enough to spur activity in the sector, The Wall Street Journal reported. Overall, housing activity, particularly in the single-family sector, has been continuing its slow but steady recovery.
Sales of previously owned homes continued their uneven recovery, with the category hitting its highest rate in nearly a decade in October as pent-up demand trickles back onto the market. With the overall continued growth in new construction activity, especially that targeting the renewed entry-level homes category, price appreciation is expected to taper into 2017, opening more potential buyers to homeownership.
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