Housing Starts And Permits Above Consensus In November

Mostly good news finally greets the housing sector as both starts and permits are showing an uplift in November results that top Econoday's consensus range. Starts jumped to a 1.256 million annualized rate for a 4-month high with permits at a 1.328 million rate and an 8-month high.

But not all the news is good. Strength in both starts and permits is concentrated in multi-family units, not single-family units where construction costs per unit are higher and have a bigger impact on residential investment. Single-family starts fell sharply to an 824,000 rate vs October's 864,000 with single-family permits up only fractionally to 848,000. Multi-family starts surged to 432,00 from 353,000 with permits at 480,000 vs 418,000.

And in unfavorable news for ongoing new home sales, single-family completions fell sharply to 772,000 from 816,000, again in contrast to the multi-family side where completions rose to 327,000 from 279,000.

Regional data show two months of strength in starts for the South, which is by far the largest region in this report, and a swing higher for the Northeast which is by far the smallest. Permits in November also show the South out in front. The Midwest and the West posted mostly declines with permits in the latter, which underscores weakening sentiment in yesterday's home builders report, down 11.0 percent from November last year.

Year-on-year rates continue to speak to the general weakness of housing with total starts down 3.6 percent and permits up only 0.4 percent. Today's report is positive especially for builders of multi-family units but the weakness on the single-family side won't be giving much lift to what are downcast expectations for the nation's housing sector.