2023.12.1913:35:00UTC+00U.S. Housing Starts Unexpectedly Spike To Six-Month High In November

The Commerce Department released a report on Tuesday unexpectedly showing a substantial increase in new residential construction in the U.S. in the month of November.

The report said housing starts soared by 14.8 percent to an annual rate of 1.560 million in November after inching up by 0.2 percent to a downwardly revised rate of 1.359 million in October.

The surge surprised economists, who had expected housing starts to decrease by 0.9 percent to an annual rate of 1.360 million from the 1.372 million originally reported for the previous month.

With the unexpected spike, housing starts reached their highest level since hitting an annual rate of 1.583 million in May.

"Housing starts jumped in November to a six-month high as demand for new builds remains solid amid a persistent extreme shortage of housing inventory," said Nationwide Economist Daniel Vielhaber.

Vielhaber added, "With little hope for a substantial move downward in mortgage rates in the near-term, this dynamic could remain well into the new year."

Single-family housing starts skyrocketed by 18.0 percent to an annual rate of 1.143 million, while multi-family starts shot up by 6.9 percent to an annual rate of 417,000.

Meanwhile, the Commerce Department said building permits slumped by 2.5 percent to an annual rate of 1.460 million in November after jumping by 1.8 percent to an upwardly revised rate of 1.498 million in October.

Building permits, an indicator of future housing demand, were expected to fall by 1.1 percent to an annual rate of 1.470 million from the 1.487 million originally reported for the previous month.

Multi-family permits plunged by 8.5 percent to an annual rate of 484,000, more than offsetting a 0.7 percent increase in single-family permits to an annual rate of 976,000.

"Building permits were down some overall, but permits for single family starts climbed to an 18-month high," said Vielhaber. "This suggests that single family starts could remain strong in the next couple of months as builders continue to see demand for new builds despite the headwinds facing buyers."

A separate report released by the National Association of Home Builders on Monday showed homebuilder sentiment in the U.S. rebounded in December after falling for four consecutive months.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 37 in December after falling to an eleven-month low of 34 in November. Economists had expected the index to rise to 36.