New Housing Starts Rebound

By:: Kirk Haverkamp - MortgageLoan.com

New housing starts rebounded in November, increasing 8.9 percent to an annual rate of 574,000 units, according to figures released today by the Commerce Department.

The increase follows a one-month dip that saw construction starts fall to 527,000 in October, after holding in the 580,000-590,000 range since June.

Some analysts believe the drop was caused by uncertainty over the pending expiration of the first-time homebuyer tax credit and that sales picked back up again once the credit was renewed and a credit extended to repeat buyers as well.

It’s also possible the drop was due to sampling error; the Commerce Department stresses that its monthly figures have a wide margin of error and that it takes at least three months for reliable trends to be identified.

Multiunit construction perks up

November’s increase was driven by a 62.7 percent rise in construction starts on multiunit dwelling such as apartments and condominium complexes, which rose to an annual rate of 83,000 units. By comparison, construction starts on single-family homes were up only 2.1 percent, to an annual rate of 482,000 units.

The increase was sharpest in the Northeast and South regions, which saw overall increases of 16.4 percent and 12.3 percent, respectively. Single-family starts were up 5.4 percent in the West and 4.4 percent in the South, but declined in the Northeast and Midwest by 2.1 percent and 6.2 percent, respectively.

The overall November total of 574,000 units was 12.4 percent below the November 2008 rate of 655,000, driven by a steep decline in multiunit construction as builders responded to a glut of apartment buildings and condominium developments. Multiunit construction starts were down 53.9 percent for the year, from a rate of 180,000 in November 2008.

Construction starts on single-family homes, however, showed an increase for the year, up 5.5 percent from the November 2008 rate of 457,000, and posted yearly increases in three of the four U.S. regions. Compared to November 2008, construction starts on single-family homes were up 12.9 percent in the South, 12.2 percent in the Northeast and 2.1 percent in the West. The only annual decline was in the Midwest, where single-family construction starts were down 13.6 percent from November 2008.

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