Single-family housing starts dipped to a seasonally adjusted annual rate of 828,000 in November, according to new residential construction data released by the Commerce Department Friday morning. This month's result marks a -4.1% decrease from October's downwardly revised rate of 869,000 and represents a 5.3% gain compared to November 2015, when the estimate was 786,000.
The Midwest was the only region to experience a month-over-month increase in 1-unit housing starts, rising 19.8% from October levels to a rate of 145,000. All other regions decreased from October levels, most significantly the West, where single-family starts dropped -15.3% to a still-healthy rate of 183,000. On a year-over-year basis, the Midwest and South reported gains in the single-family category. Gains were most significant in the Midwest, where this month's levels surpassed October 2015 levels by 33.0%
Total housing permits, the leading indicator for future starts, fell -4.7% in November, primarily due to a big dip in the multifamily sector, especially permits for 5-unit or more structures, which fell -15.8% month-over-month. Single-family permits rose 0.5%, indicating that next month's report could be mediocre. Permits issued for 1-unit structures increased 7.0% in the Midwest, and 2.7% in the West, while the Northeast and South experienced single-digit losses month-over-month.
Total privately-owned housing completions increased 15.4% in November to a seasonally adjusted annual rate of 1,216,000. Completions of both single-family and multi-family housing increased in November following October's strong report, by 3.3% and 44.5%, respectively.
“There’s little to cheer about regarding residential construction in November," said Lawrence Yun, chief economist for the National Association of Realtors. "The fall in single-family housing starts offers zero relief to the housing inventory shortage throughout the country. Moreover, the collapse in multifamily starts assures continued robust growth in rents next year. Housing costs are rising and this trend will nudge up the broad consumer price inflation enough to surpass 3% next year, which is easily above the Federal Reserve’s desired inflation target. The soft housing starts also assures continued sluggish expansion in the overall economy.”
Read the full release from the Commerce Department here>>