Single-Family Housing Starts Exploded Higher In November As Mortgage Rates Tumbled

Despite a small bounce in homebuilder sentiment (and a tumble in mortgage rates), analysts expected housing starts and building permits to decline MoM in November (after unexpectedly rising last month).

But the picture was very different – Housing Starts exploded 14.8% MoM (-0.2% exp) with only a small downward adjustment in October (from +1.9% MoM to +0.2% MoM). That is the third monthly gain in a row.

Building Permits fell slightly more than expected (-2.5% MoM vs -2.2% MoM exp) and an upward revision in Octobe from +1.1% to +1.8% MoM.

Source: Bloomberg

On a SAAR basis, Housing Starts are near their highest since May 2022, while building permits are at their lowest since July…

Source: Bloomberg

Under the hood, the surge was all in single-family starts which soared 18% MoM. Single-family permits rose MoM for the 11th month in a row…

Source: Bloomberg

Mortgage rates are down 100bps from their highs at the end of October, but it seems while homebuilders are starting homes at a furious pace (despite sentiment being low still)…

Source: Bloomberg

…the more forward-looking permits refuse to buy what The Fed is selling…

Source: Bloomberg

Oddly, despite the regime shift lower in housing starts and completions, construction jobs (according to the BLS) are hitting new cycle highs…

Source: Bloomberg

More supply is good – no doubt – but we can’t help but feel like Powell’s latest pivot will simply create the next mega-bubble in real estate… again!