The FINANCIAL — Homebuilding in the U.S. rose broadly in November, the latest sign the housing market is gaining momentum despite the prospect of higher mortgage rates, according to Nasdaq.
Housing starts, reflecting groundbreakings on single-family homes and apartments, climbed 10.5% from a month earlier to a seasonally adjusted annual rate of 1.173 million, the Commerce Department said on December 16. That nearly erased a 12% decline in October and sent starts up 16.5% in November from a year earlier.
In a sign of forthcoming construction, building permits also rose across the board. Permits overall climbed 11% to an annual pace of 1.289 million. Permits for multifamily homes surged 30.8%, the biggest jump since March 2012. Permits for single-family homes rose 1.1%.
Economists surveyed by The Wall Street Journal had expected November housing starts to reach a rate of 1.14 million, and 1.15 million building permits to be issued.
Much of that demand has been in the multifamily sector. Housing starts on structures with five or more apartments rose 13.1% in the first 11 months of this year compared to the same period a year earlier. Single-family housing starts are up 10.5% in the same period.
Nonetheless, construction levels for new homes remain historically low. Homebuilders report shortages of land and labor, leading to delays in projects’ completion. Those delays often serve to push prices up, so the builder can recoup costs.
Low inventory of existing homes, which account for around 90% of the housing market, has also driven prices increases in that market. The national median home price was 5.8% higher in October than October 2014,according to the National Association of Realtors. But the industry group said existing-home sales were on track for their best year since the recession.
Historically low mortgage rates and soaring rents in some of the hottest job markets like Denver and San Francisco have made a home purchase more appealing for those who can afford a down payment, but housing prices have also risen in much of the country. Although job growth has been steady over the past five years, wages have stayed relatively flat, making it harder for many would-be buyers to save for a home.
U.S. homebuilders continue to report a positive outlook. The National Association of Home Builders’ confidence index slipped this month but remained at a high level, the group said Tuesday.
In late November, the Commerce Department reported new-home sales in October rose to a seasonally adjusted annual rate of 495,000, up 4.9% from a year earlier. The November existing-home sales figure will be released Dec. 22, and new-home sales data will be released Dec. 23.