The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts jumped to a 13-month high in November. New residential construction rose 3.3 percent from 1,256,000 units at the annual rate in October to 1,297,000 in November, its fastest pace since October 2016.
More importantly, the increase in the latest data came from a significant uptick in activity for single-family construction, up from 883,000 in October to 930,000 in November, its best reading since September 2007. Moreover, single-family starts have risen by 13.0 percent over the past 12 months. This is encouraging news and a sign that the housing market has strengthened recently from the lull experienced over the summer months. With that in mind, it should not be a surprise that home builder optimism soared to an 18-year high in the latest survey, with a very healthy outlook for 2018.
At the same time, multifamily housing starts inched down in the November release, off from 373,000 in October to 367,000 in November. Multifamily activity can be highly volatile from month to month, and yet, they have trended upward since August’s reading of 301,000. On a year-over-year basis, multifamily starts have increased 12.6 percent from 326,000 units in November 2016.
Meanwhile, housing permits remained highly elevated despite some easing in the November report. Residential permits decreased from 1,316,000 units in October, its highest point since August 2007, to 1,298,000 in November. As such, permits, which are a proxy of future activity in the housing market, are hovering around 1.3 million units as we approach the end of 2017. That news should bode well for residential construction growth in 2018.
Indeed, single-family permitting ticked up from 850,000 to 862,000 in the latest data, a level not seen since August 2007, with year-over-year growth of 9.7 percent. Despite that positive development, the multifamily segment eased from 466,000 to 436,000 in November, with a year-over-year decline of 7.0 percent.