“The single-family market showed signs of life, but the multi-family market lapsed back into a coma,” explained Patrick Newport, U.S. economist for IHS Global Insight in Lexington, Mass. November's multi-family permits estimate was the third lowest since 1960.
According to the Census, permitted single-family units in November were at a seasonally adjusted annual rate of 530,000, 4% below October's 552,000 and is 14.7% below November 2009's estimate of 621,000. Privately-owned housing starts in November were at a seasonally adjusted annual rate of 555,000, 5.8% below the November 2009 rate of 589,000.
The single-family start increase was a surprise to some analysts, considering recent single-family permit figures. Housing starts for the year recovered somewhat, after dropping the prior two months. But both a surprise and a disappointment were multi-family starts. Multi-family had shown signs of life earlier this year, though permits and starts have dropped for three straight months.
Newport concluded that housing starts remain depressed for three reasons. "First, the jobs recession has sharply reduced the rate of household formation, which has led to 'doubling up' and a drop in immigration. Second, financing is hard to get. Third, the housing glut and the wave of foreclosures hitting the market have depressed housing prices, making it hard for builders to make a profit on a new home."