WASHINGTON – Builders broke ground on more homes in November than at any time in more than five years as growing demand helped the industry overcome rising U.S. mortgage rates.
Housing starts jumped 22.7 percent to a 1.09 million annualized rate, exceeding all forecasts of economists surveyed by Bloomberg and the most since February 2008, data from the Commerce Department showed Wednesday. Permits for future projects held near a five-year high, indicating the pickup will be sustained into 2014.
Gains in construction will probably boost economic growth this quarter as an improving job market propels homebuilding to its best year since 2007. Federal Reserve officials Wednesday took the first step toward unwinding unprecedented monetary stimulus, saying they will reduce monthly bond purchases to $75 billion from $85 billion as employment and the expansion showed signs of progress.
“The economy seems to be picking up and there’s quite a lot of pent-up demand,” said David Sloan, a senior economist at 4Cast Inc. in New York and the top forecaster for housing starts over the past two years, according to data compiled by Bloomberg. “Even if the Fed does start to taper, I think the housing market will prove resilient.”
The median estimate of 72 economists surveyed by Bloomberg projected U.S. housing starts would rise to a 955,000 annualized rate. Estimates ranged from 868,000 to 1.04 million. November saw the biggest one-month jump since January 1990.
Starts are on track to reach 930,500 this year, the most since 2007’s 1.36 million, according to Bloomberg calculations.
Wednesday’s data offered the first look at housing starts since August readings after a government shutdown in October delayed reports.
November building permits fell 3.1 percent from the prior month to a 1.01 million rate, exceeding the projected 990,000 annual pace that was the median estimate in the Bloomberg survey. October’s 1.04 million were the highest since June 2008.
Starts of single-family houses climbed 20.8 percent to a 727,000 rate in November, the most since March 2008, from 602,000 the prior month.
Three of four regions showed an increase in groundbreaking last month, led by a 41.7 percent surge in the Midwest and a 38.5 percent jump in the South that was the biggest since July 1982. Starts climbed 8.8 percent in the West and fell 29.4 percent in the Northeast.