Housing Starts Advance Sharply
WASHINGTON – Taking advantage of unseasonably warm weather, homebuilders began construction on new houses at a stronger-than-expected pace in November, the government said on Tuesday, a sign of the housing market's resiliency in the face of a recession.
The Commerce Department said housing starts surged 8.2 percent to a 1.645 million annual rate in November, the fastest monthly pace since July and well above analysts' expectations. October starts were revised to a 4.0 percent decline and a 1.521 million rate from the previously reported 1.3 percent drop and 1.552 million annual rate.
Building permits, a signal of future activity, were also up in November, rising 5.3 percent to a 1.564 million annual rate from October's 1.485 million a year pace.
Analysts polled by Reuters had expected the combination of low mortgage rates and good weather to keep building activity relatively robust, though not at the pace reflected in November's numbers. The average forecast had called for a 1.550 million annual rate of starts.
Temperatures across much of the country were warmer than usual in November, which allowed construction to go on at higher than usual pace. The total number of homes under construction increased to 1.024 million in the month, up from 1.012 million in October and the highest level since November 1987, according to Commerce.
Starts were up in three of the four regions tracked. The Northeast saw starts gain 20.1 percent in November while starts in the Midwest increased by 20.5 percent. In the West, starts rose 12.7 percent, while they dipped by 1.6 percent in the South, the largest market for new homes.
While the economy tumbled into recession in March, the housing sector has maintained a relatively strong stance, aided by low mortgage lending rates. According to mortgage finance giant Freddie Mac, the average interest rate on a 30-year mortgage loan has been below 7 percent since August, and was 6.66 percent in November.
The Federal Reserve has also cut short-term interest rates 11 times this year in an effort to shore up economic activity.