Housing Market Strengthens in November

Housing starts nationwide rebounded from an October setback, increasing by 5.3 percent to a seasonally adjusted annual rate of 2.123 million units in November, the U.S. Commerce Department has reported. The pace was 17.5 percent above a year ago.

Single-family housing starts rose 4.8 percent to 1.808 million units for the month, matching the record set last February. Single-family starts were up by 7.5 percent on a year-to-date basis, easily on pace to surpass last year's record-setting activity.

"The housing market still is fundamentally healthy," said Dave Wilson, president of the National Association of Home Builders (NAHB) and a custom home builder from Ketchum, Idaho. "Many builders sense some tapering off of buyer demand because of resistance to high prices and rising interest rates, as reflected in our recent housing market index survey of builders, and many companies have begun offering certain incentives in order to maintain their sales and production."

"Measures of housing affordability have deteriorated in recent months, but economic fundamentals are still quite solid," said NAHB chief economist David Seiders. "2005 will be a record year for single-family housing and the second best year for total housing starts, exceeded only in 1972 when multifamily production surged."

Three of four regions reported strong increases in housing starts for the month. Construction of new homes and apartments rose 11.0 percent in the Northeast, 12.3 percent in the Midwest and 11.5 percent in the West. Construction activity was down 1.3 percent in the South.

Multifamily housing starts increased by 7.9 percent for the month to a seasonally adjusted pace of 315,000 units. This was 2.5 percent below the pace of a year ago.

Issuance of total building permits increased 2.5 percent to a seasonably adjusted rate of 2.155 million units for the month. Single-family permit issuance was up 0.2 percent to a pace of 1.710 million units for the month. The pace of multifamily permit issuance increased 12.4 percent to a pace of 445,000 units for the month.

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