US: Housing starts decline sharply, give back much of October’s spike - Wells Fargo

Analysts from Wells Fargo, explained that the 18.7% decline in November housing starts, follows an upwardly revised 27.4% gain in October and they continues to see permits at a healthy rate, despite de 4.7% decline. 

Key Quotes: 

“Housing starts tumbled 18.7 percent in November, which was larger than consensus estimates. The prior month’s gain was revised higher, however, and permits held up reasonably well. Much of the volatility in starts has been in the multi-sector, which saw starts surge 76 percent in October and fall back 45.1 percent in November. The past three months have been unusually volatile for multifamily starts. Permits have not moved around nearly as much.”

“Unseasonably mild weather also likely played a role in October’s stronger housing numbers and November’s apparent payback. Homebuilding normally declines in the fall as the holidays approach and temperatures turn cooler.”

“The expectation of rising interest rates may have also been a factor in October’s surge in new construction. Apartment developers likely rushed to lock in financing before the presidential election and many home buyers likely signed purchase contracts and locked in mortgage rates ahead of the Fed’s widely anticipated hike in the federal funds rate that finally took place this past week.”

“Housing permits fell 4.7 percent in November to a still solid 1.201-million unit pace. Overall permits are running slightly below their trailing three-month average but are still 10.2 percent higher that starts.”