Single-family starts increased 7.6% in November to a pace of 768,000, according to November New Residential Construction data released by the U.S. Department of Commerce this morning. Home building stocks rose on the news.
In October, the pace of single-family housing starts was stunted by poor activity in the South (a 7% decline month-over-month), as the Northeast and West regions posted increases, and the West saw a marginal decline. Starts of single-family homes increased in every region during November, excluding the Midwest with 4.4% decline. But the real driver of month-over-month growth was the 8.8% rebound of starts in the South to a pace of 409,000.
Total residential construction starts increased 10.5% in November to a pace of 1.2 million, following a 12% month-over-month decline in October. A 25% drop in multifamily starts (the biggest slump since August 2014) was the primary cause of October's decrease, but the "decline partly reflect[ed] extraordinary activity the month prior," according to Metrostudy chief economist Brad Hunter, when multifamily starts jumped to 455,000, causing a "yo-yo effect" in October starts numbers. Multifamily starts rose in November, increasing 18.1% month-over-month to 398,000.
Total private-owned housing completions were down 3.2% from last month to a seasonally adjusted annual rate of 947,000 in November, which is still 9.2% more than last year’s 867,000. Among all structures, single-family homes have the highest rates of completion and the largest growth, at a rate of 632,000 in November, a 0.3% increase from last month and a 3.8% rise from last November.
The pace of single-family home completions continues to lag behind the pace of single-family home starts. The affordability and availability of labor plagues builders in many markets, and is causing longer build times that are throttling a steady flow of revenue. Inclement weather during Spring caused additional building delays for markets like Houston and Austin in the South, which may have been a contributing factor to the region's dip in starts during October.
As we quickly approach 2016, November's release sparks optimism for the new home market in the year ahead with single-family home starts at the highest pace seen during 2015. At this point, they're outpacing 2014's numbers by 14.6%. Although the pace of starts is still below the historical norm, builder confidence remains stable, and the housing market continues to move in the direction of recovery. View the full release from the Department of Commerce here >>