U.S. housing starts surged to a 1-1/2 year high in November and permits for future construction were the highest since March 2010 as demand for rental apartments rose, offering hope for the weak housing market.
PETER CARDILLO, CHIEF MARKET ECONOMIST AT ROCKWELL GLOBAL CAPITAL, NEW YORK
This is good news. It should add to this morning's strength in equities, and also add to the good news out of Europe. The economy continues to show strength moving into the new year and we could look forward to growth exceeding market expectations. But of course, everything is subject to what is going on in Europe.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
There was some pretty impressive upside here, both in the starts and in the permits. In the breakdown it does look like there was a pretty substantial boost from multiples, which tend to be more volatile but they have sustained improvement in their trend while singles are also pointing at underlying improvement in home building. It is positive for the housing market, which is picking up from rather subdued levels. Demand is coming off the lows, so that is healthy.
NATHAN SNYDER, PORTFOLIO MANAGER AT SNOW CAPITAL MANAGEMENT IN SEWICKLEY, PENNSYLVANIA
The housing stuff seems like it's bottoming which is obviously the first step to recovery. How long it bottoms will be anybody's guess, but we needed it to bottom. If you look at inventories as they reported, they look low but they are they are extraordinarily low if we ever get back to a household formation level that resembles anything like the past.
So this is something that is a chicken and the egg issue, obviously construction drives employment, employment drives housing. And there is a virtuous cycle there if we can ever reach a bottom and start building off of that. The main hope is that we are at least near that bottom, but the bottom could last a while. So it could start to turn up in the next six months or eighteen months but the next leg is up, not down, from here.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
New housing construction activity ascended to an annualized rate of 685k homes started in November, a jump of 9.3% from October. This is starts' third straight reading that reports better than expected performance (a trend in most economic indicators lately). Starts not only surpassed market consensus of 635k, but building permits, also forecasted to come in at 635k, also rose above expectations to an annualized rate of 681k permits. Unlike starts, permits had been expected to fall from October's issuance of 644k permits (originally 653k). Since November 2010, starts increased by 24.3% and permits by 20.7%--,both posting their highest annual change since April 2010, at the tail end of the tax credit program. Multi-unit starts dominated December's performance, as these types of residences rose by 25.3% to 238k. This comes after having fallen by 15.2% in October. Annually, 5+ units have risen by 180.5%, a record on series dated back to 1959. Single-family home construction rose for the second month, this time by 2.3% to 447k. Permits, which have been up for two months (last month by 9.3%), rose by 5.7% in November. Both single-family and multi-units supported the advance with gains of 1.6% and 13.9% respectively. Both types of residences have also been up for two consecutive months, with multi-units leading the charge.