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Economic Watch: New Home Starts Fall

December 16, 2014

By Evan Lockridge

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Newly released figures show a drop in housing starts during November, with an even bigger decline in the number of new building permits issued -- but new home building remained above a one million unit annual rate for the third month in a row.

The U.S. Commerce Department reported on Tuesday housing starts fell 1.6% from October to 1.03 million units. Also, October’s performance from September was revised sharply upward, tempering the November figure.

The last time the annual level of home starts was above the 1 million mark for three straight months was in early 2008.

The last time the annual level of home starts was above the 1 million mark for three straight months was in early 2008.

Single-family housing starts were down 5.4% to a seasonally adjusted annual rate of 677,000 units in November, while multifamily production rose 6.7% to 351,000 units.

For the first 11 months of the year, total home starts are 8.2% higher than the first 11 months of 2013.

A barometer of future home building activity, the number of new home building permits issued, declined in November 5.2% to an annual rate 1.04 million from October’s revised rate of 1.09 million.

“It was a very disappointing morning for housing data, suggesting a significant slowdown in activity as we head into the final months of the year,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “The Federal Reserve has described the recovery in the housing market as ‘slow.’ Certainly, despite increased volatility, starts and permits are only slightly above first quarter levels, echoing the Fed's assessment."

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