November Housing Starts Rise

Date: December 17, 2015

Multi-Family Units Seen Leading Construction Uptick

New Commerce Department data on monthly housing starts found that housing starts found that housing starts jumped 10.5 percent to an annual rate of 1.17 million homes in November. Reuters reported economists had forecast about 1.1 million starts. Analysts attributed the increase to an 18.1 percent increase in multi-family housing, largely on a spike in starts in the Midwest and South. Construction of single family housing also was up 7.6 percent to an annual rate of 768,000, the fastest in eight years. Building permits, an indicator of future activity, were up 11 percent to an annual rate of 1.29 million units, far exceeding analysts’ forecasts of 1.135 million. The AP said there has “been a sharp growth in homebuilding, with starts having increased 11 percent so far this year. Solid hiring over the past two years and relatively low interest rates have buoyed the real estate market, encouraging more people to upgrade to new houses and sign rental leases.”

What This Means For Small Businesses

Small businesses, particularly those involved in the construction industry, may see the latest data as a positive indicator as a slowdown in housing means fewer orders for companies involved in the homebuilding process. The numbers on housing starts echo the overall economic picture, which shows some improvement but continues to indicate less-than-stellar growth. In the latest NFIB report on Small Business Economic Trends, chief economist William Dunkelberg cautioned that “overall, the outlook remains the same with a slow 2 percent-ish growth and there is still not much pressure on prices from Main Street. All we can do at this point is hope for a more business friendly New Year.”

Additional Reading

The Wall Street Journal also covered the latest housing start data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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