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US housing starts, permits fall; trend points to recovery
[WASHINGTON] US housing starts and permits fell in November, but the underlying trend remained consistent with an improving housing market.
Groundbreaking declined 1.6 per cent to a seasonally adjusted annual 1.028 million-unit pace, the Commerce Department said on Tuesday. November's starts were revised up to a 1.045 million-unit rate.
Economists polled by Reuters had forecast starts rising to a 1.04 million-unit rate from October's previously reported 1.01 million-unit pace.
Housing continues to be stymied by tepid wage growth, which has been far outpaced by home price increases. Higher mortgage rates are also a constraint, although they have since declined from a peak reached in September 2013.
But with job growth accelerating, wages are expected to pick up next year and pull first-time buyers, especially young Americans, into the housing market, providing a tailwind for the economy.
Last month's drop in groundbreaking was concentrated in the single-family homes segment, the largest part of the market, which fell 5.4 per cent to a 677,000-unit rate. Single-family starts had posted two straight months of hefty gains.
Starts for the volatile multi-family homes segment increased 6.7 per cent to a 351,000-unit pace. The increase unwound some of October's 9.9 per cent drop.
Multi-family starts continue to be driven by demand for rental units as many financially-strapped Americans shun home ownership.
Last month, permits dropped 5.2 per cent to a 1.035 million-unit pace after two straight months of gains. That was the biggest drop since January.
Permits, which lead starts by three to four months, have been above the one million pace threshold since July.
Permits for single-family homes fell 1.2 per cent to a 639,000-unit pace. Permits for multi-family housing tumbled 11.0 per cent to a 396,000-unit pace. That followed two strong months of big increases.