Weakness persists in US home construction despite November gains
Homebuilding unexpectedly jumped in the southern United States last month, but the gain was all in apartments and the pace of construction nationwide remained sluggish, according to government data released Tuesday.
Amid rising interest rates, tight supply, elevated prices and labor shortages, the housing sector has suffered declining sales and reduced investment over the last year, which some economists say suggests US economic growth has peaked.
Total housing starts rose 3.2 percent in November compared to the prior month, rising to an annual rate 1.26 million units, overshooting forecasts for 1.23 million.
Despite the increase, construction was still 3.6 percent below November of last year and the new data included a downward revision for October.
The monthly construction figures are subject to broad margins of error but the data show a consistent downward trend in recent months. And a survey of monthly homebuilder sentiment released Monday also showed an unexpected plunge.
Single-family home construction started fell 4.6 percent compared to October, to 824,000 units.
Much of the gain in building was in the South and all of it was concentrated in the volatile multi-family segment. Construction slowed sharply in the fire-stricken West as well as the Midwest.
Meanwhile, permits for new construction, a less volatile measure that points to supply in the pipeline, rose five percent to 1.33 million, the highest level since April, again driven largely by activity in the South.
But the key single-family segment saw permits essentially flat at 848,000 units, the lowest since May 2017, and 13 percent below November of last year.
Ian Shepherdson of Pantheon Macroeconomics described the numbers as "OK."
The permits data indicated home builders expected sales to rise as part of the recovery from recent natural disasters, he said.
"These data are s consistent with our view that the underlying housing market is nothing like as weak as some of the recent data ... suggest," he wrote in a client note, calling for a rebound, "winter weather permitting."
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