Housing Starts, Building Permits Jump in November
Not that the decision hasn't already been made, but if Janet Yellen and the rest of the Federal Reserve's governors needed any more evidence that the economy was strong enough to withstand the downside of an interest rate increase, last month's housing starts and building permits numbers would do the job nicely.
For November, the annualized pace of building permits issued to homebuilders moved from October's pace of 1.161 million to 1.289 million homes. That was the second-best reading since 2007, when the numbers were on the way down. The only recent reading that's been higher was June's 1.337 million permits.
And homebuilders (XHB) ARE using those permits. Housing starts rebounded from October's disappointing pace of 1.062 million to 1.173 million last month.... also one of the higher readings we've seen since the housing recovery began back in 2011.
Building Permits & Housing Starts Chart
Despite the trends doubters (the housing market has climbed a wall of worry since making the turn in 2011), there's likely to be more of the same growth in starts and permits in the foreseeable future, if only because there's simply not enough available housing inventory to choose from for active buyers. As of the National Association of Realtors' latest tally, only 2.14 million existing homes are currently for sale, versus a peak of more than 4 million in 2007. Inventory levels haven't significantly grown beyond intra-year cyclical growth since 2006.
Inventory of new homes to buy has been similarly thin. The supply of new homes on the market is only about 5.5 months worth of the current pace of new home purchases... a figure still near the 2010 low point following the housing market meltdown that began in 2007. For perspective, new-home inventory peaked at a 12.2 months in early 2009.
Home Inventory & Home Sales Chart
The existing-home inventory currently for sale is a 4.8 month supply, which is also still near the multi-year low of 4.3 seen in January of 2013.