Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Housing starts edge higher

By Les Christie, staff writer

NEW YORK (CNNMoney.com) -- New home construction is not dead, just resting comfortably.

The number of new private home starts rose in November to a seasonably adjusted annualized rate of 555,000, according to a Commerce Department report. That was 3.9% above revised October figures but 5.8% lower than a year ago.

The numbers were higher than expected. A consensus of housing industry experts surveyed by Briefing.com had predicted 545,000 starts for the month.

New construction has been running at just a fraction of its housing-boom self. At the peak of the market in 2005, more than 2 million homes were built.

"The construction industry is limping along toward the end of a lousy year," said Mike Larson, a housing industry analyst for Weiss Research.

Larson did glean one positive out of the report -- a seven-month high in starts for single-family homes -- which came in at 465,000, up 6.9% from October. It was a dearth of multi-family starts that dragged the overall numbers down.

Another indicator of future housing market health, the number of housing construction permits that builders applied for, fell in November. There were 530,000 permits issued, which was down both compared with October (- 4%), and 12 months ago (-14.7%). Permits also came in well below forecasts of 560,000.

For Larson, those negative numbers provided further evidence that, "2011 will be another rebuilding year, if you pardon the pun. There will be no robust recovery for housing as usually happens when coming out of a recession."

Kevin Brundgart, CEO of mortgage lender RoundPoint Financial, points out that low consumer confidence is playing a role in depressing the housing market, especially for new homes.

"We've reached no acknowledged bottom on home prices," he said. "That has altered buyer psychology a bit. They may not be thinking about investing in homes."

High inventories of existing homes, including many repossessed properties coming onto the market at low, low prices, has also claimed some of the market share that would normally go to the new construction.

That should only worsen with as many as 12 million mortgage borrowers in danger of losing their homes to foreclosure over the next two years. If even a fraction of those repossessions occur, it will flood the housing market and further lower demand for new homes. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.93%3.86%
15 yr fixed2.99%3.02%
5/1 ARM3.26%3.20%
30 yr refi3.98%3.92%
15 yr refi3.05%3.06%
Rate data provided
by Bankrate.com
View rates in your area
Find personalized rates:
  • Find Homes for sale
    Real estate and homes for sale on Trulia

  • Property Type
  • Find a home in: New York | Atlanta | Chicago | Los Angeles
  • Washington D.C | Houston | Philadelphia | More options
Index Last Change % Change
Dow 17,812.19 19.51 0.11%
Nasdaq 5,102.81 0.33 0.01%
S&P 500 2,089.14 2.55 0.12%
Treasuries 2.24 -0.01 -0.31%
Data as of 11:21pm ET
Company Price Change % Change
General Electric Co 30.66 0.07 0.23%
Pfizer Inc 31.97 0.64 2.04%
Bank of America Corp... 17.47 0.00 0.00%
Freeport-McMoRan Inc... 8.30 0.30 3.75%
Synchrony Financial 31.34 -0.21 -0.67%
Data as of 4:00pm ET


A long-term highway funding bill in Congress plans to use billions from the Fed to help fund projects. More

Watsi crowdfunds donations to cover healthcare costs of those in need. And it's seeing a surprising trend: micro-donations via the popular Chinese social networking app, WeChat. More

Some of the coolest toys this year are from small businesses. Here are 10 hot toys that just might be a smash hit this holiday season. More

Your new credit card might be safer, but it could lead to more headaches at the check-out line this holiday season. More