Good Economic Sign: November Housing Starts Shoot Up

Photo of construction workersIn a result that exceeded economists’ estimates, November overall housing starts jumped an impressive 10.5% to a seasonally adjusted annual rate of 1.173 million units.  Well over the revised October rate of 1.062 million units, it also exceeded the 1.007 million units in November last year by 16.5%.

More importantly for our industry, single-family home construction rates jumped as well.

See more on this encouraging economic data…

Single-family housing starts is a solid leading indicator for the custom integration industry, as the more houses that are constructed, the more likely that many of them will seek to include A/V entertainment systems and automation solutions in their homes. The collapse of the housing market after 2006 really devastated the custom integration channel, forcing many out of business, while others scrambled to shift their businesses from one targeted at new home construction to the retrofit (installing systems in existing homes) market.

Graph of November starts

This graph shows housing construction starts for single-family homes (in red) and total, which includes multi-family dwellings (in blue). As you can see, while still well below the peak levels in 2006, the result this November is the best rate experienced here in years.

Single-family home construction in November jumped to 768,000 units or 7.6% over the October rate of 714,000 units. This rate was also a solid 14.6% over the November 2014 rate of 670,000 units.

Firmly on the Path

This latest data from the Commerce Department released on Wednesday suggests that the housing market remains firmly on the path of recovery, although still far from the past highs of 2006. Many economists suggest that the rate of housing construction in 2006, where total starts (including multi-family dwellings) went well over 2 million units and single-family starts also began to approach that lofty number, were never a “real” or sustainable rate for home construction.

After a long, painful slide from 2006-2009, starts stabilized and bumped along the bottom until 2011, when we began to see a more durable recovery with continuous upward momentum. This new result continues that trend and bodes well for integrators who are likely to see increasing opportunities for installations into new home construction.

The Economy – and Some Economists – are Heating Up

According to Bloomberg, a survey of 81 economists suggested that the November starts would come in at 1.13 million units. With the results well over that figure, more economists will likely view the economy as heating up – further supporting the move made by the Fed to begin a gradual increase in interest rates.

In a regional breakdown of results, we find that housing construction actually decreased in the Northeast (-8.5%) and was flat in the Midwest (+0%). But the West region showed a solid bump (+6.3% overall and +15.1 in single-family) and the South skyrocketed with a 21.3% increase overall, and an 8.8% increase in single-family starts.

Demand is Good

“Demand for housing is still good,” Stephen Stanley, chief economist at Amherst Pierpont Securities LLC told Bloomberg. “More people are working and they’re starting to get paid a little more too, balance sheets are very clear, and people are feeling a little better about the overall environment.”

Finally, the future continues to look bright for housing construction as building permits – the first step towards future construction starts – increased 11% to 1.29 million units overall. This is the highest rate since June. Permits for single-family units also increased and even though it was a more modest 1.1% increase – it was the highest number of permits issued this year.

About Ted

A sales and marketing specialist - primarily in the technology industry - I've experienced a sort of "circle of life" in business. I've been a mass merchant retailer, a specialty retailer, a specialty manufacturer, a large volume manufacturer, a distributor, and even represented sales representatives. Now the owner of a marketing company that works with a variety of businesses on improving their strategic marketing and business development - I analyze issues from all angles to develop holistic solutions.

Comment on this Post

Your email address will not be published. Required fields are marked *


We welcome your comments and encourage you to participate by offering your insights and thoughts on our posted stories. However, in some instances, your comment may be subject to editing or deletion if they violate one or more of the following points.

    --First, while we support vigorous debate and are generally quite tolerant of even controversial thoughts and ideas - we do not tolerate rudeness, profanity, or personal attacks.
    --Second, please stay on topic with your thoughts.
    --Third, while links to relevant content are OK, we do not allow self-promotion or SPAM.

The owner of this site reserves the right to edit or delete any comments submitted to this site without notice. This comment policy is subject to change at any time.

This site uses Akismet to reduce spam. Learn how your comment data is processed.