Economy Watch: New Housing Starts Rise in November
- Dec 19, 2013
Private housing starts in November came in at an annualized rate of 1,091,000 units, according to the Census Bureau on Wednesday. That’s 22.7 percent higher than the revised October estimate of 889,000, and 29.6 percent higher than the November 2012 rate. Single-family housing starts in November were at an annualized rate of 727,000 units, 20.8 percent above the revised October figure. The annualized rate for multifamily buildings (more than four units) was 354,000.
The rolling 12-month average for single-family starts, which is currently at a shade over 600,000 units, is still historically low. The housing bubble of the 2000s took the average up to an unsustainable peak of more than 1.7 million units, but during more “normal” times, the average hovered roughly between 800,000 and 1.2 million units.
A more forward-looking indicator of residential real estate, private housing units authorized by building permits, also came in fairly strong in November: an annualized rate of 1,007,000 units. That’s 3.1 percent below the revised October rate of 1,039,000, but is 7.9 percent above the November 2012.
Time to taper, says Fed
Wednesday was the Day of the Taper, with Fed Chairman Ben Bernanke announcing that the central bank is going to buy $75 billion worth of bonds a month starting in January, down from $85 billion currently. Not only that, if the economy stays relatively strong—not a certainty, but certainly feasible—the Fed will continue to knock $10 billion off its “asset buying” each month.
At the same time, Chairman Ben promised to keep interest rates really low—essentially zero, that is—“well past” the moment when unemployment drops lower than 6.5 percent, where it’s been headed lately. (Previously, the Fed merely promised not to raise rates before the 6.5 percent threshold was reached.) Not only that, he said, low interest rates will be maintained especially if inflation languishes below 2 percent, where it has been for a while now.
One factor in the Fed’s decision making seemed to be the modest budget agreement that emerged from Congress last week (which, as it happened, passed the Senate on Wednesday). Bernanke mentioned the measure as a “positive” development, noting that it will be “good for confidence.” In-fighting in Congress, in other words, is less likely to be a stumbling block to economic growth in the near future.
Wall Street took news of the taper well. The Dow Jones Industrial Average gained a sizable 292.71 points, or 1.84 percent, to end at a record 16,167.97. The S&P 500 advanced 1.66 percent and the Nasdaq was up 1.15 percent.