Housing Starts declined in November
Summary
Residential construction easing
Total housing starts declined 1.8% during November. The unexpected drop was mostly owed to a sharp fall in multifamily starts. Meanwhile, single-family starts rose 6%, bouncing back from October’s hurricane-related fall. In terms of permits, single-family edged up slightly while multifamily jumped to the highest level since February. Through the monthly volatility, the trend in overall residential construction remains lackluster as high interest rates discourage new projects and home builders contend with elevated inventory levels.
Changes to trade, immigration and other economic policies as a result of the recent elections threaten to constrain new residential construction as a whole in the years ahead. Within single-family, scarce supply in the existing market and lower capital costs should help support activity; however, the elevated stance of mortgage rates will remain as a significant headwind moving forward. On the other hand, multifamily construction looks set to remain sluggish, yet firming apartment market conditions on account of higher rates boosting rental demand and reducing new starts has emerged as a tailwind.
Author
Wells Fargo Research Team
Wells Fargo
