Housing starts jumped almost 15% in November from October, to 1.560 million at a seasonally-adjusted annualized rate. This is the highest level of housing starts since May. Starts in October were revised lower, to 1.359 million from 1.372 million. Single-family starts rose a very strong 18% in November, to 1.143 million, their highest level since April 2022. Multifamily starts (apartments and condominiums) rose 9% in November to 417,000 but remain well below their levels in 2022 and early 2023, when they were regularly in the 500,000 to 600,000 range. 

Residential permits fell 2.5% in November from October, to 1.460 million. Single-family permits rose around 1% to 976,000. Multifamily permits, which are more volatile, were down 9% to 484,000. 

Lower mortgage rates and strong demand boosted housing starts, particularly single-family starts, in November. Demand for housing, particularly single-family construction, surged in 2021 following the pandemic thanks to strong demand and historically low mortgage rates. Multifamily construction was very strong in 2022 with high household formations, especially among young people, and rising rents. But higher mortgage rates in 2023 weighed on both single-family and multifamily building earlier this year. 

With mortgage rates down over the past couple of months, however, and with prices for existing single-family homes rising again, single-family construction has picked up at the end of 2023. Multifamily building is still soft, however, as rent growth has slowed with more supply coming online. 

Residential investment added to GDP growth in the third quarter of 2023; this was the first positive contribution since early 2021. With mortgage rates down at the end of 2023 housing, especially single-family, is likely to be positive for economic growth at the end of this year and in 2024. Single-family construction is more important for the economy than multifamily.