Who’s afraid of the taper? US housing starts spike

The report was released as Fed officials were set to meet for a second day. The housing market had slowed in recent months, a development policymakers acknowledged at the October meeting.

A run-up in mortgage rates, in anticipation of the U.S. central bank tapering its monthly bond purchases, took some edge off the sector’s recovery earlier in the year, but not enough to halt the process as a steady increase in household formation from multi-decade lows props up demand.

Last month, groundbreaking for single-family homes, the largest segment of the market, soared 20.8 percent to a 727,000-unit pace, the highest level since March 2008.

Starts for volatile multi-family homes jumped 26.8 percent to a 364,000-unit rate.

Multi-family starts have risen strongly through the course of the housing recovery, buoyed by demand for rental apartments as still-high unemployment and stringent lending practices by bank price potential homeowners out of the market.

While permits to build homes fell 3.1 percent in November to a 1.01 million-unit pace, they were above economists’ expectations for a 990,000-unit pace.

The drop in permits last month is likely to be temporary. Homebuilder confidence rose in December, with builders upbeat on current sales conditions, future sales and prospective buyers, a report showed on Tuesday.

In November, permits were weighed down by a 10.8 percent drop in approvals for the multifamily sector. Permits for single-family homes rose 2.1 percent.

–By Reuters

Article source: http://www.cnbc.com/id/101281934

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