New construction on homes and apartments increased sharply in November, a bright spot for the beleaguered U.S. real estate market.
New housing starts last month rose 9.3% over a revised October estimate and were up 20.1% above November 2010. Homes and apartments were built at a rate last month that would produce 685,000 new units this year, when adjusted for seasonal variations, according to the Commerce Department.
The gains were largely driven by the volatile apartment sector, meaning the uptick could reverse itself. Single-family housing starts in November were up 2.3% over October, though down 1.5% over November 2010. Homes were built last month at a seasonally adjusted annual rate of 447,000 units.
"This was a good report," wrote economists Patrick Newport and Michelle Valverde of the consultancy IHS Global Insight. "The single-family market is finally getting off the mat and ... the multi-family segment is continuing to make small strides. ... [W]e should expect good housing start numbers in the upcoming months."
Starts were at their highest level in 19 months. Month over month, starts were up 22.6% in the West, 3.15 in the South and 53.8% in the Northeast. Starts were down 18.2% in the Midwest.
The number of building permits issued to builders also showed improvement, with new permits up 5.7% over October and 20.7% above the November 2010 rate. Permits were issued at a seasonally adjusted annual rate of 681,000 units.
"By historical standards, home-building activity is still very depressed, but at least it appears to be on an established upward trend,” Paul Diggle, property economist with Capital Economics, wrote in a note.
The new-home market this year has suffered worse than the one for previously owned homes as foreclosures continue to provide stiff competition for newly built properties.
New-home builders have turned to developing models for multi-generational families and touting their green credentials to distinguish themselves from foreclosure properties –- often competing against the very models they built during the boom years as little as four years ago.
-- Alejandro Lazo
Photo: A home under construction in Buckingham, Pa. Credit: William Thomas Cain / Getty Images