Good weather and a stabilizing economy helped housing in November, boosting starts and permits, according to data released Wednesday by the U.S. Census Bureau.
Permits, an important indicator of future housing and economic activity, rose 6% percent overall on a monthly basis to a seasonally adjusted level of 584,000 units. Year-over-year, total permits are down 7.3%.
But single-family permits increased 5.3% on a monthly basis to a pace of 473,000 homes in November, suggesting that builders and buyers alike are finally feeling more optimistic about their financial future.
“Single-family permits had flattened recently, [which we believe was] payback for the first-time homeowners' tax credit passed in February, which shifted housing starts and permits from 2010 and late 2009 into the first seven months of 2009,” noted Patrick Newport, U.S. economist for IHS Global Insight in Lexington, Mass. “November's solid increase in single-family permits suggests that the payback period is over, and that single-family starts should continue to make steady gains going forward.”
(Year-over-year, single-family permits were up 12.1% in November.)
Michael Rehaut, an analyst covering the public builders for J.P. Morgan, also predicted improvement in the months ahead. “ While some of the permit activity is likely in reaction to the recent tax credit extension, we also believe that overall, this coming spring selling season should be better than last year’s, also helped by greater affordability and a stabilizing economy,” he said in a research note.
Housing starts also grew in November, rising 8.9% on a monthly basis to a seasonally adjusted level of 574,000 in the third-warmest November on record in 115 years, according to government data cited by Newport.
Overall, November starts stand 12.4% below the same month one year ago, but only because of a significant drop in multifamily activity.
In contrast, single-family starts actually rose 2.1% month over month to a 482,000-unit level. That translates into a 5.5% year-over-year, which is first such annual increase since March 2006, according to Rehaut, who highlighted the positives in these monthly numbers.
“We note that the levels of total and single-family starts are solidly above the year-to-date averages of 549,000 and 432,000, respectively, and both total and single-family permits are at the highest point this year,” Rehaut said. “As a result, we continue to believe that housing demand continues to stabilize if not slowly reemerge.”
Newport agreed. “In 2010, job growth, low inventory levels of new homes--currently at their lowest point since May 1971--and improving household formation should result in sustained increases in housing starts,” he said.
Alison Rice is senior editor, online, at BUILDER magazine.