Residential Construction Sails into Holiday Season

Housing starts surged in November to the highest seasonally adjusted rate since March and the second highest in the last 12 months. The U.S. Census Bureau and the Department of Housing and Urban Development said the topline residential construction numbers, both housing starts and permits, rose during the month and both outperformed analysts' expectations.

Housing starts were up 11.8 percent compared to October's seasonally adjusted annual rate of 1.502 million units (revised from 1.520 million) to 1.679 million and were 8.3 percent higher than the rate in November 2020.

Analysts polled by Econoday and Trading Economics both fell far short of the month's numbers. Their respective forecasts for starts were rates of 1.563 million and 1.568 million units.

The increase in starts was reflected in both single-family and multiunit numbers. Single-family starts rose 11.3 percent month-over-month to 1.173 million units, up from a revised (from 1.049 million) 1.054 million units in October. This was 0.8 percent lower than the prior November. Starts in buildings with five or more units gained 12.1 percent to 491,000 units, 39.1 percent growth from November 2020.

On an unadjusted basis, builders began construction on 129,400 units of housing during November, 87,300 of which were single-family houses. In October starts numbered 128,700 and 89,700, respectively.

For the year-to-date (YTD) there have been a total of 1.471 million housing starts, a 16.3 percent increase over the 1.265 million started in the first 11 months of last year. Single-family starts total 1.038 million and multifamily units 421,200. Over the same period last year those numbers were 900,700 and 352,000.

Permits also performed well, increasing 3.6 percent from October to 1.712 million, the highest rate since August and maintaining a small (0.9 percent) edge over permitting in November 2020. The original estimate for permits in October, 1.650 million units, was revised slightly to 1.653 million.

Consensus estimates for permits differed slightly but both publications badly undershot the mark. Econoday was looking for a 1.655 million rate and Trading Economics for 1.663 million.

Single-family permitting rose by 2.7 percent for the month but was still lagging November of 2020 by 4.5 percent. Permits were issued at a 1.103 million rate, up from 1.074 million in October. Multifamily permits rose 6.1 percent to 560,000 and were 15.0 percent higher year-over-year.

There were 131,400 permits issued during the month on a seasonally unadjusted basis, down from 136,400 in October Single-family permits dropped from 85,700 to 80,100.

Total permits YTD are 19.1 percent higher than in 2020 at 1.570 million. Single-family permits, at 1.028 million grew by 15.7 percent from last year and the 494,400 permits for multifamily construction represent 27.7 percent growth.

Residential units were completed in November at an annual rate of 1.282 million units, 910,000 of which were single-family. Total completions were 4.1 percent higher than in October and up 3.1 percent from a year earlier while single-family completions were down fractionally from both earlier periods. Multifamily completions were at a 364,000 annual rate, 19.7 percent, and 13.8 percent higher than in October and November 2020 respectively.

There were 102,100 homes completed during the month compared to 108,700 the prior month. This included 74,700 single-family houses, down from 81,100 in October.

For the YTD, total completions number 1.202 million units, up 3.9 percent from 1.156 million last year. Single-family completions rose 5.5 percent to 865,100 units and multifamily completions increased 0.7 percent to 329,700.

At the end of October there were 1.498 million units under construction, 762,000 of which were single-family houses. An additional 258,100 million permits have been issued for which construction has not started, 141,100 of them for single-family homes.

Starts in the Northeast rose 27.5 percent from October but were down 9.1 percent year-over-year. Permitting rose 12.4 percent compared to October but fell by a nearly equal percentage from one year earlier. Completions rose 2.6 percent and 9.1 percent for the two periods.

In the Midwest there was a 7.3 percent decline in housing starts but they remained 7.9 percent higher than a year earlier. Permitting declined 8.1 percent for the month and 7.7 percent on an annual basis. There were 9.8 percent more completions during the month than in October and 13.1 percent more than a year earlier.

Starts in the South jumped 18.4 percent for the month and were 15.8 percent higher the the previous November. Permitting rose more modestly, by 4.9 percent and 1.2 percent, respectively. The rate of homes readied for occupancy was 3.6 percent greater than the prior month and 2.0 percent higher year-over-year.

Starts in the West rose 5.2 percent for the month but eased back by 0.2 percent from the rate in November 2020. Permitting increased 4.6 percent and 10.5 percent while completions were up 2.6 percent for the month but down 2.2 percent from a year earlier.