Construction of new U.S. homes increased more than forecast in November and permits to build climbed to a 12-year high as the housing market strengthened amid low mortgage rates, solid job growth, and optimistic buyers and builders.
Residential starts rose 3.2 percent to a three-month high 1.37 million annualized rate after an upwardly revised 1.32 million pace in the prior month, according to government figures released Tuesday. Permits, a proxy for future construction, increased 1.4 percent to an annualized 1.48 million pace.
The data indicate residential construction may add to fourth- quarter growth after contributing in the previous quarter for the first time since the end of 2017. Demand has been fueled by mortgage rates near a three-year low as the job market remains resilient and wage gains help put money into the pockets of potential homebuyers.
Construction of one-family homes rose to the highest since January, while permits for those dwellings increased to the highest level since July 2007.
The positive reading corroborate other housing data. Homebuilder sentiment soared to a 20-year high in December. The latest consumer sentiment gauge from the University of Michigan also showed an index measuring homebuying conditions rose to a five-month high.
