New residential construction showed a notable increase in the month of November, according to a report released by the Commerce Department on Wednesday, with the increase in housing starts coming roughly in line with economist estimates.
The report showed that housing starts rose by 8.9 percent to an annual rate of 574,000 in November from the revised October estimate of 527,000. Economists had been expecting starts to rise to 574,000 from the 529,000 originally reported for the previous month.
While housing starts rebounded after showing a notable decline in the previous month, they remain down 12.4 percent compared to the same month a year ago.
The monthly increase was due largely to a 16.4 percent increase in housing starts in the Northeast as well as a 12.3 percent increase in starts in the South. Housing starts in the Midwest and West showed more modest increases, rising by 3.0 percent and 1.9 percent, respectively.
A jump in multi-family starts also contributed to the monthly increase, with the November rate for buildings with five units or more surging up by 62.7 percent compared to October. Single-family housing starts increased by a much more modest 2.1 percent.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "The home buying tax credit was extended in early November and likely helped to boost starts relative to October where there was uncertainty with its fate."
The report also showed that building permits, an indicator of future housing demand, increased by 6.0 percent to an annual rate of 584,000 in November from the revised October rate of 551,000.
The increase in building permits exceeded the expectations of economists, who had expected permits to rise to 570,000 from the 552,000 originally reported for the previous month. Nonetheless, permits remained down 7.3 percent compared to the same month a year ago.
Boockvar said the increase in building permits was likely due in part to the extension of the homebuyer tax credit even as homebuilders face daunting competition from foreclosures.
Housing data is likely to remain in focus next week, with reports on new and existing home sales due to be released during the holiday-shortened week.
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