New-home construction rose more than forecast to a nine-month high in November, highlighting the strength of a residential housing market that’s been supported by
Residential starts rose 1.2% to a 1.547 million annualized rate from an downwardly revised 1.528 million a month earlier, according to government report released Thursday. The median estimate in a Bloomberg survey of economists called for a 1.535 million pace.
The unexpected strength, bringing new-home construction nearly back to February’s level, underscores robust buyer interest in new homes thanks to record-low mortgage rates and Americans looking for bigger spaces during the pandemic.
“Housing remains a bright spot in an otherwise weak economy, seeing a bounce from strong demand and low mortgage rates,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a report. “Lean inventories will likely continue to support building activity over coming months, mostly in the single-family sector.”
Single-family starts rose for a seventh month to a 1.186 million annualized rate that was the highest since 2007, while starts for projects with five or more units, a category that tends to be volatile and includes apartments and condos, increased to 352,000.
New construction strength was broad-based nationally. Starts climbed in all four regions, led by a 12.9% rise in the Northeast, according to the report, which is published jointly by the Census Bureau and the Department of Housing and Urban Development.
Still, housing may face headwinds as the worsening spread of the virus prompts fresh restrictions and stimulus talks in Washington remain unresolved. Separately,another government report on Thursday showed that applications for U.S. unemployment benefits unexpectedly jumped last week to the highest level in three months.
Thursday’s housing report showed applications to build, a proxy for future construction, rose to 1.639 million, the highest since 2006. New single-family homes sold but not started also reached a 14-year high, indicating that builders will be able to keep busy for some time.
“Construction activity has not yet fully caught up with the surge in housing activity, leaving room for modest further gains,” Ian Shepherdson of Pantheon Macroeconomics said in a note. “Home sales have peaked, at least for now, though we think a renewed increase is likely next spring.”
A separate report Wednesday showed that
