An unexpected spike in residential building pushed new home construction to a six-month peak in November, as housing starts jumped to a seasonally adjusted annual pace of 1.56 million units.
That’s up 14.8% month over month and up 9.3% year over year, according to new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The surge shattered expectations, with economists polled by Reuters predicting that starts would slip to 1.36 million. Uncharacteristically warm November weather may have contributed to the uptick by allowing more projects to break ground and move forward, along with lower mortgage rates that likely encouraged buyers and soothed affordability concerns.
Single-family starts drove the bulk of the gain, bounding 18% from October to a pace of 1.143 million units in November. That’s the fastest rate of starts since April 2022 and pushed the streak of single-family building increases to three consecutive months. Single-family starts remain 7.2% lower on a year-to-date basis, but the seasonally adjusted annual pace of single-family starts is now up by 42.2% annually.
Robert Dietz, chief economist for the National Association of Home Builders (NAHB), said that November’s single-family gain may end up being amended downward upon review, but he still sees more growth ahead.
“The single-family starts figure is remarkably strong, and we would not be surprised to see this figure revised lower or fall back slightly in the next month, given the nearly 20% rise in November,” Dietz said. “NAHB is forecasting an approximate 4% gain for single-family starts in 2024, as mortgage rates settle lower, economic growth slows and inflation moves lower.”
Multifamily construction was up too, climbing 8.9% to an annualized pace of 404,000 units. Despite the gain, multifamily building remains pointed on a downward trajectory, with starts down 33.7% year over year. The under-construction multifamily pipeline is robust, however, with the most in-process projects nationwide since the early 1970s.
Combined with a glut of new deliveries in many major rental hubs, the busy pipeline has discouraged many developers from starting new multifamily projects. New groundbreakings have also been limited by high capital costs, although that barrier may grow less cumbersome in the months ahead with interest rates on the wane.
