The number of housing starts ticked up in November despite pressure from high mortgage rates, an indication of relatively resilient demand for new construction.
Housing starts, the change in the number of new residential buildings that began construction, rose 14.8% from October to this past month, according to a Tuesday report from the Census Bureau.
They are now at a seasonally adjusted annual rate of 1.56 million. From November 2022, they increased by 9.3%.
For permits to build, which are seen as a proxy for future construction, the rate last month was 4.1% above the rate in November of last year.
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As of Monday, the average rate on a 30-year, fixed-rate mortgage was 7.65%, according to Mortgage News Daily, which tracks daily changes in rates. That is down from a recent peak of above 8%, although is still higher than in the years prior to the pandemic.
The housing market was red-hot during much of the pandemic because the Federal Reserve cut interest rates to near-zero levels, causing ultra-low mortgage rates for homebuyers. Those historic rates spurred a massive upsurge of demand, causing prices to rise and new construction to skyrocket.
The whiplash from the ultra-low pandemic mortgage rates to now has caused ripples throughout the housing sector.
Housing starts peaked in April 2022, when they were the highest they had been since 2006, just before the housing market crashed. Since then, they have gradually trended lower as mortgage rates rose.
Sales of new homes in October were 17.7% higher than in September 2022. Additionally, the median sales price for a new home was $409,300 in October.
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In contrast, existing home sales in October slowed 4.1% to a seasonally adjusted annual rate of 3.79 million, their lowest level in more than a decade.
Mortgage rates can be expected to fall some more next year when the Fed begins cutting interest rates. Investors are pricing in up to six rate cuts next year, a scenario that would be a good one for those looking to purchase a home.