November U.S. Housing Starts Unexpectedly Rose 3.9% In the beleaguered U.S. housing sector, even modest good news -- such as November's unexpected 3.9% rise in housing starts to a 555,000 seasonally adjusted annual rate -- represents a victory. Adding a bit to that small win, October's total also was revised modestly higher to 534,000 from the initially estimated 519,000 tally. In November, starts of single-family homes totaled a 465,000 rate, up 6.9% from October's revised 435,000 rate.

Economists survey by Bloomberg had expected November housing starts to register a 550,000-unit annual rate, after running at a 601,000-unit rate in September and 589,000 in November 2009. They hit a cyclical low of a 477,000 in April 2009.

U.S. government housing officials caution that initial housing starts data contain a large margin of error, and revisions can likewise be large. Housing market analysts also emphasize that it can take three to five months for trends in the sector to form, and retrenchments are possible.

One negative note in the November report comes from building permits -- considered a leading indicator of housing construction: They fell 4% to 530,000 and are now 14.7% below the 621,000 rate registered a year ago. However, permits for single-family homes rose 3% to a 416,000 annual rate.

In November, housing starts rose in three of the four U.S. regions, surging 15.8% in the Midwest, and rising a modest 2.3% in the South and 2.1% in the West. In the Northeast, they fell 2.5%.

The Long Journey to Normal Activity

After the housing sector's large contraction during the 2007-2009 recession, building activity in the U.S. is at such low levels that even a decent report is worth cheering.

That said, economists caution against investor giddiness regarding the sector based on recent data. Even excluding the numbers from the 2004-2006 period of homebuilding mania (when starts exceeded a 2 million-unit annualized rate), current starts are still far below the 1.3 million-unit to 1.7 million-unit range that prevailed during the 1990s Clinton-era economic expansion and the 1983-1988 Reagan-era expansion. Given the recovery's current trajectory, it will take another 18 months to two years for housing starts to approach those normal levels.

Of course, the major unknown is whether the years ahead will approximate historical norms. The nation's economy is undergoing structural changes -- one factor behind the continuing high unemployment rate. And historically, job creation -- a key to household formation -- has been a major factor promoting rising home sales.

The U.S. will have to start adding about 150,000 to 200,000 jobs per month consistently, and have a substantially lower unemployment rate, to keep home starts and sales trending higher. But given the changes occurring in the economy and workforce, the creation of those jobs is hardly assured. That's why it's premature to declare an end to the housing sector's slump.

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ssyankeeclipper

more BS 2 years of benifits ended for alot of folks they are no longer counted, and has anyone heard anything about how well retailers are doing with xmas shopping? no because they aren't media controll is already alive and kicking, just like the bogus tax law crap passed, has any middle class taxpayers read it? no they don't want you to see all the BS in it

December 17 2010 at 6:35 AM Report abuse -1 rate up rate down Reply
cartra

DOES ANYONE BELIEVE THIS! THE PROPAGANDA MACHINE IS ALIVE AND WELL. I FEEL LIKE THE AFLAC GOOSE JUST STANDING WITH WITH MY MOUTH OPEN!

December 16 2010 at 11:41 PM Report abuse +1 rate up rate down Reply
fred

Boy here's some forward thinking. Vacant houses all over hell's half acre, more going into forclosure and were building more?!?! Must be as good of an idea as printing more money so we can be rich again....

December 16 2010 at 11:06 PM Report abuse +2 rate up rate down Reply
RMS

What do we need with more new houses? No one can afford to buy them anyway, no jobs, and banks aren't lending. With all the vacant foreclosures that are on the market, and all the ones that the banks are "holding back", the banks need to play ball and start lending on these foreclosures to turn them into performing assets. The economy is going to get worse after the new year, employment will increase with retail layoffs, spending will come to a standstill, and more homes that are behind in their mortgage payments will go to foreclosure.

December 16 2010 at 7:13 PM Report abuse +1 rate up rate down Reply
LEE Resolution

Absurd isn't it ??

December 16 2010 at 6:38 PM Report abuse +4 rate up rate down Reply
atx888

Housing starts when there is a glut of unsold or repos, with people continuing to default on their mortgages? What planet am I on? This coming from the same folks that say the economy was on sound footing, and the there is no danger of the housing bubble spilling over to the broader economy ... just before the bottom fell out.

December 16 2010 at 6:35 PM Report abuse +3 rate up rate down Reply
LEE Resolution

Eliminate the capital gains and the death tax, reduce corporate taxes by 1/2, and you'll see the economy take off like a rocket.

December 16 2010 at 6:32 PM Report abuse +2 rate up rate down Reply
ultraz2

The economy is going to stop BANKS RAISED 30 YEAR MORTGAGE INTREST RATES and killed the housing recovery. Banks refuse to co-operate with the FED and keep 30 year mortgage intrest rates low. The FED and CONGRESS need to show the Banks how fed up they are with the Banks and regulate the hell out of them until they lower 30 year mortgage intrest rates and help out the USA ECONOMY.

December 16 2010 at 5:14 PM Report abuse +3 rate up rate down Reply
ultraz2

The great recession started in December of 2007, January 2011 will mark the 5th calendar year that has been effected by the continueing great recession. 2007,2008,2009,2010,2011.

December 16 2010 at 4:59 PM Report abuse +3 rate up rate down Reply
2 replies to ultraz2's comment
tj1108

And I believe that at the start of (Jan) 07 Nancy Pelosi and Harry Reid took over the congress with complete Demecrat control. Probably just a coincidence.

December 16 2010 at 5:14 PM Report abuse +3 rate up rate down Reply
cyberfreddie

Your point?

December 16 2010 at 7:09 PM Report abuse -1 rate up rate down Reply
ultraz2

National debt almost 14 trillion dollars. Taxes are far too high to raise any more on middle class americans and social security benefits, cutting DEFENSE SPENDING by 60 to 80 percent and taxing the rich, will eventually be the only way to deal with this run away debt. The longer they wait to cut Defense spending the more years that defense spending will have to remain at those lower levels.

December 16 2010 at 4:53 PM Report abuse +2 rate up rate down Reply