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Brian Wesbury
Chief Economist
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Bob Stein
Deputy Chief Economist
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 | Housing Starts Rose 10.5% in November |
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| Posted Under: Home Starts • Housing |
Implications: The home building recovery is alive and well, giving the Fed even more ammo to raise short-term rates later today for the first time since 2006. In spite of the wettest November in thirty years, housing starts soared in November, easily topping consensus expectations, rising 10.5% to a 1.173 million annual rate. The large increase in November itself was not just due to a big gain in volatile multi-family starts; single-family starts increased 7.6%, are up a very healthy 14.6% from a year ago, and are now the highest since 2008. Housing starts bounce around from month to month, but the underlying trend has been up since 2011 and we expect that trend to continue. The total number of homes under construction (started but not yet finished) increased 2.2% in November and is up 18.3% versus a year ago. Based on population growth and "scrappage," we expect overall housing starts to rise to about 1.5 million units per year by early 2017, so a great deal of the recovery in home building is still ahead of us. Supporting the case for further increases in building, housing permits boomed as well in November, rising 11.0%. The gain in permits was primarily driven by the volatile multi-family sector, which rose 26.9%, but single-family building permits increased 1.1%. Overall permits are up 19.5% versus a year ago while single-family permits are up a solid 9%. In other recent housing news from yesterday, the NAHB index, which measures confidence among home builders, declined to 61 in December, versus 62 in November. Readings greater than 50 mean more respondents report good market conditions. One year ago, the overall index was at 58, and many said Fed Tapering would drive it lower. But housing continues to grind higher. Even with higher short-term rates, expect the sector to remain one of the bright spots in the Plow Horse Economy in 2016.
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