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U.S Single-Family Housing Starts Rise to Highest in a Decade

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Groundbreaking on single-family homes proceeded in November at the strongest pace in a decade, driving U.S. housing starts to a faster-than-estimated rate, government figures showed Tuesday.

HIGHLIGHTS OF HOUSING STARTS (NOVEMBER)

  • Residential starts rose 3.3% to 1.3m annualized rate (est. 1.25m) after 1.26m pace in prior month (revised from 1.29m)
  • Single-family starts jumped 5.3% to 930,000, highest since Sept. 2007; South and West regions also were 10-year highs
  • Permits, a proxy for future construction of all types of homes, fell 1.4% to 1.3m rate (est. 1.27m) from 1.32m pace; single-family permits in U.S. and South both highest since Aug. 2007

    • Key Takeaways

    The latest results make it more likely that residential construction spending — which subtracted from economic growth in the second and third quarters — will add to the pace of U.S. expansion in the October-December period, which is already shaping up as a solid quarter.

    The November gains are encouraging because they’re driven by single-family home building, which tends to spur economic activity and jobs in a bigger way than apartment construction. Single-family permits have increased for three straight months, also indicating a sustained pipeline of work for developers.

    The figures reflect a boost from rebuilding and recovery efforts following hurricanes Harvey and Irma, as areas in the South had faced the brunt of the damage from flooding and winds.

    A separate report on Monday showed homebuilders’ confidence jumped in December to the highest level since July 1999, indicating developers expect demand to advance amid steady economic growth, a tightening job market and still-low mortgage costs. At the same time, further gains in homebuilding may run up against hurdles including a shortage of workers, rising costs for materials and a scarcity of ready-to-build lots.

    Other Details

  • Groundbreaking on multi-family homes, such as apartment buildings and condominiums, fell 1.6 percent to an annual rate of 367,000; data on these projects can be volatile
  • Housing starts plunged 40 percent in Northeast to 87,000, biggest drop in a year; down 13 percent in Midwest
  • Report shows wide margin of error, with a 90 percent chance that the November figure on housing starts was between a 5.8 percent drop and 12.4 percent gain
  • Housing units authorized but not yet started reached 155,000, the most since June 2008; homes under construction increased to 1.11 million, most since August 2007
  • Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington

    • Bloomberg

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    Dean Popplewell

    Dean Popplewell

    Vice-President of Market Analysis at MarketPulse
    Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
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