In a promising sign for the housing market, construction of new homes experienced a significant boost of 14.8% in November. Builders ramped up their efforts to meet the strong demand for homes, especially considering the shortage of available properties for sale.
According to the government report released on Tuesday, housing starts rose to a 1.56 million annual pace, up from 1.36 million in November. This figure represents the total number of houses that would be constructed in a year if the same rate of construction was maintained throughout each month, mirroring the impressive growth observed in November.
The data surpassed the expectations of Wall Street analysts, who were anticipating a rate of 1.36 million housing starts. It is important to note that these numbers are seasonally adjusted.
Both single-family and multi-family construction experienced growth in November, highlighting the broad-based expansion within the housing sector. This positive trend continued into December, as a recent survey of builders revealed an increase in their optimism regarding home-buying demand. In an effort to attract more buyers, builders resorted to slashing prices in November, a move that proved effective in maintaining shoppers’ interest.
Furthermore, the recent drop in mortgage rates during mid-December is expected to provide an additional boost to housing starts and new home sales in the coming months. This development holds great promise for both builders and prospective homebuyers alike.
On the other hand, building permits, which serve as an indicator of future construction activities, registered a decline of 2.5% to a rate of 1.46 million. While this decrease may raise some concerns, it is important to consider the overall positive trajectory of the housing market.
As news of the impressive housing starts spread, early Tuesday trading saw a favorable reaction in U.S. stocks, with DJIA and SPX experiencing gains. Additionally, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) remained below 4%, further enhancing the positive market sentiment.
In conclusion, the surge in construction activities for new homes in November is a testament to the resilience of the housing market. With high demand, low mortgage rates, and growing optimism among builders, the future looks bright for both the construction industry and potential homebuyers.
