Housing starts plunge in November

The Scotsman Guide - Victor Whitman - 16 December 2016

Housing starts fell steeply in November after hitting a decade-long high in October, the U.S. Census Bureau reported.

Overall starts ran at an annual pace of 1.09 million in the month, down 18.7 percent from the October level (1.34 million) and down 6.9 percent from the November 2015 rate of 1.17 million.

October’s surge was largely driven by a massive increase in multifamily construction in the Northeast, and the November reading went the other way. Overall apartment building fell off in November by nearly 44 percent in the month and by nearly 32 percent year over year, the Census Bureau reported.

Single-family starts in November also fell by 4 percent over the October level to 828,000 units; however, single family starts were still were running 5 percent above the November 2015 level, one of the few bright spots in the report.  Single-family starts remained at the third highest pace for the year.

Still, the overall starts figure disappointed analysts. Year-over-year, overall starts were down 36 percent in the Northeast region and nearly 7 percent in the South, but were up 3.6 percent in the Midwest and unchanged in the West.  

The weak figures also ran against the trend in builder confidence in the market for new homes, which rose in December to the highest level since the last housing boom 11 years ago, according to the National Association of Home Builders. 

“There’s little to cheer about regarding residential construction in November,” National Association of Realtors Chief Economist Lawrence Yun said. “The fall in single-family housing starts offers zero relief to the housing inventory shortage throughout the country. Moreover, the collapse in multifamily starts assures continued robust growth in rents next year.”

 Yun also said that housing prices are rising and should push consumer price inflation beyond 3 percent next year.

“The soft housing starts also assures continued sluggish expansion in the overall economy,” Yun said.