U.S. Housing Starts and Permits (November 2024)

Homebuilding activity fell for a third consecutive month in November

• Housing starts fell 1.8% month-on-month (m/m) in November to 1.29 million (annualized) units, disappointing expectations for a modest rebound. Revisions to the data for the two prior months added 3k units to the previously reported tallies.
• The decrease in housing starts was driven by the multi-family segment which fell 23.2% m/m (or 84k units), while single-family starts rose 6.4% m/m (or 61k units).
• Forward looking indicators for residential construction were a bit more encouraging. Residential permits rose 6.1% m/m to 1.51 million annualized units. Single-family permits rose 0.1% m/m, while multi-family permits jumped 19.0% m/m.
• Among the four Census regions, declines were recorded in the Midwest (-28.2% m/m) and West (-11.9% m/m), while gains were recorded in the Northeast (+10.6% m/m) and South (+10.2% m/m).

Key Implications

• Homebuilding activity retreated again in November as the underlying trends in the single- versus multi-family segments are on different tracks. The number of multi-family units under construction has fallen by over 20% in the past year, working down the excess supply that had built up. With multi-family permits rising sharply last month, it seems likely that multi-family construction will find a more stable footing in the coming months. In contrast, the market for new single-family homes has tipped into an excess supply situation recently, which may result in some moderation in single-family housing starts over the near-term.
• The National Association of Home Builders' confidence index was unchanged in December, as the recent sustained high levels of mortgage rates offset builder optimism for a more accommodative regulatory environment under the incoming administration. We expect the Federal Reserve to cut interest rates by 25 basis-points again later today, before moderating their pace of rate cuts moving through 2025. Nevertheless, we still expect rates to be roughly 100 basis-points lower by the end of next year, which should help to thaw out the housing market and with it, homebuilding activity as well.  

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