– December 20, 2017
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Housing permits fell 1.4 percent in November as a decline in the multifamily segment offset a rise in the single-family segment. Total permits were issued at a 1.298 million seasonally adjusted annual rate in November, down from 1.316 in October. Housing permits are one of the AIER leading indicators. Despite the drop in November, permits have been on a rising trend, resulting in a positive contribution in our business cycle model.

Single-family permits rose 1.4 percent to 862,000 at a seasonally adjusted annual rate in November, up from 850,000 in October. The single-family segment had gains in three of the four regions in the report. The Northeast rose 3.8 percent to 55,000 from 53,000 in October, the Midwest posted a 3.1 percent rise to 131,000, and the South had a 2.4 percent increase to 467,000. The West was the only region to show a decline in the single-family segment, dropping 2.3 percent to 209,000 (see chart).

Permits for structures with five or more units fell 8.8 percent in the month to 395,000 while structures with two to four units rose 24.2 percent to 41,000 from 33,000. From a year ago, structures with five or more units are down 7.7 percent while structures with two to four units are unchanged.

Housing starts rose 3.3 percent in November on gains in both the multifamily segment and in the single-family segment. Total starts were 1.297 million at a seasonally adjusted annual rate in November, up from 1.256 in October.

Single-family starts rose 5.3 percent to 930,000 at a seasonally adjusted annual rate in November, up from 883,000 in October. The single-family segment had gains in two of the four regions in the report. The South had an 8.4 percent increase to 515,000 while the West rose 11.4 percent to 224,000. The Northeast was unchanged at 63,000, and the Midwest posted an 11.1 percent drop to 128,000.

Starts for structures with five or more units rose 0.8 percent in the month to 359,000 from 356,000. From a year ago, structures with five or more units are up 11.1 percent.

Overall, single-family housing construction continues to rise while the multifamily segment has plateaued. Strong consumer fundamentals provide support for demand, though rising prices and rising mortgage rates offset some of the support.

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Robert Hughes

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Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
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