Builders broke ground on more homes in November than at any time in over five years as growing demand helped the industry overcome rising US mortgage rates.
Housing starts jumped 22.7 per cent to a 1.09 million annualized rate, the most since February 2008, data from the Commerce Department showed Wednesday. Permits for future projects held near a five-year high, indicating the pickup will be sustained into 2014.
The housing starts data was the latest indication the economy was strengthening, with employment rising solidly in October and November, and retail sales and industrial production exceeding expectations last month.
Groundbreaking increased 1.8 per cent in October to an 889,000 unit pace, delayed data revealed in late November.
US Home Building, Sales
Starts for multi-family homes in the US jumped 26.8 per cent in November, to a 364,000-unit rate.
Multi-family starts have risen strongly through the course of the housing recovery, buoyed by demand for rental apartments as still-high unemployment and stringent lending practices by banks priced potential homeowners out of the market.
While permits to build homes fell 3.1 percent in November to a 1.01 million-unit pace, they were above economists’ expectations for a 990,000-unit pace. Permits lead starts by at least a month.
The stock of houses on the market remains lean and the inventory of homes under construction is at a 4-1/2 year low.
In November, permits were weighed down by a 10.8 per cent drop in approvals for the multifamily sector. Permits for single-family homes rose 2.1 per cent.
Meanwhile, previously owned US home sales declined for the third consecutive month in November to the lowest level of the year as rising mortgage rates and a limited supply of properties discouraged buyers.
Purchases dropped 4.3 per cent to a 4.9 million annual rate, the National Association of Realtors reported Friday in Washington. The group still projects 2013 will be the best year for the industry in seven years, with an estimated 5.1 million properties sold.
Existing-home sales, which are tabulated when a purchase contract closes, are recovering from a 13-year low of 4.11 million in 2008 after reaching a record 7.08 million in 2005.
The median price of an existing home rose 9.4 per cent, to US$196,300 in November, from US$179,400 a year earlier, the report showed.
The number of existing properties for sale dropped 0.9 per cent from October to a 2.09 million rate, the fewest since March. At the current pace, it would take 5.1 months to sell those houses, compared to 4.9 months in the previous three months. Inventory was up 5 per cent from a year earlier.
Purchases of single-family homes decreased 3.8 per cent to an annual rate of 4.32 million. The sales pace of multifamily properties including condominiums dropped 7.9 per cent to 580,000.