US housing starts rise more than expected in November

US housing starts rose more than expected last month, according to data released by the Commerce Department on Tuesday.

Housing starts were up 3.2% to a seasonally-adjusted annual rate of 1.256m from October's revised 1.217m. Analysts had pencilled in a level of 1.225m.

On the year, however, housing starts were down 3.6% from November 2017's rate of 1.303m.

Meanwhile, single-family housing starts fell 4.6% to 824,000 last month from October's revised 864,000.

Building permits were up 5% from October's revised rate of 1.265m to 1.328m, and 0.4% above November 2017's level of 1.323m. Privately-owned housing completions nudged up 0.4% from October's revised 1.095m to 1.099m, but were down 3.9% on the year.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the details aren't as good as the headlines but the numbers are OK.

"The headlines look good but all the increase, and then some, in the starts numbers is in the volatile multi-family sector, up 22%, while single-family starts fell 4.6% to 824K, an 18-month low. Most of the drop in single-family starts, though, was in the west, where we think a good part of the 24% plunge probably can be blamed on the California wildfires. Previously, activity in the region was strong. Elsewhere, single-family starts rose, in aggregate, by 2.9%. Permits also were boosted by the multi-family component, up 15%, but single-family activity - much less susceptible to natural disasters than starts - was little changed. In the west, single-family permit issuance was steady, in sharp contrast to the starts number.

"Overall, we’re surprised that single-family permits held up so well last month, because they tend to track new home sales, which have dropped in recent months. The relatively strong permits numbers suggest that homebuilders think the fall in sales will prove temporary, probably because much of it has been triggered by the two hurricanes and the wildfires, while mortgage demand has strengthened. In short, these data are consistent with our view that the underlying housing market is nothing like as weak as some of the recent data - notably, home sales and the NAHB survey - suggest. We expect both to rebound over the next few months, winter weather permitting."