WASHINGTON -- U.S. developers broke ground on more homes last month than in October, but the increase occurred entirely in apartments. The construction of new single-family houses fell.
The Commerce Department said Tuesday that housing starts rose 3.2 percent in November from the previous month to a seasonally adjusted annual rate 1.26 million. Despite the monthly increase, that figure is down 3.6 percent from a year ago. Single-family starts dropped 4.6 percent in November and were down 13.1 percent from a year earlier.
Some of the data likely have been distorted by extreme weather. Homebuilding jumped 15.1 percent last month in the South in the aftermath of Hurricanes Florence and Michael. And home construction fell 14.2 percent in the West, possibly because of wildfires in California. Single-family homebuilding fell in the West by the most since February 2009.
Still, rising mortgage rates have dragged down home sales in the past year, discouraging many builders and causing a slump in the overall housing market. Sales of new and existing homes are dropping, and home-price gains are slowing.
The unemployment rate is at a five-decade low and incomes are rising more quickly, but many would-be buyers struggle to find homes they can afford. Developers say rising labor and materials costs make it harder for them to build more affordable properties.
"Rising home prices and mortgage rates have created high hurdles for homebuyers, while cost increases have made it difficult for builders to deliver homes at the most in-demand price points," said Danielle Hale, chief economist at realtor.com.
Sales of new homes plummeted nearly 9 percent in October, and the number of newly built, unsold homes sitting on the market has climbed to its highest level since 2009.
And an index of homebuilders' confidence has fallen sharply over the past two months. On Monday, the National Association of Home Builders said the index dropped last month to its lowest level in 3½ years.
At the same time, builders face higher costs for labor and imported materials such as steel, reflecting the U.S.' trade disputes. And demand has cooled amid rising borrowing costs and elevated home prices.
Mortgage rates shot up to nearly 5 percent in early November, the highest level in seven years. The average rate on a 30-year fixed mortgage has fallen back since then and hit 4.6 percent last week. Still, that is up from an average of 3.9 percent a year earlier.
The construction of apartment buildings has soared in the past year, rising 20 percent nationwide. That could help keep rent prices in check.
But single-family homebuilding creates more jobs and economic activity and is closely watched by economists. Their construction requires more labor and yields more purchases of furniture and appliances. Single-family homebuilding plunged 13.1 percent in November from a year earlier.
Building permits for single-family homes ticked up 0.1 percent last month, suggesting that construction of those homes will level off in the coming months. Overall permits rose 5 percent last month and 0.4 percent from a year ago.
The overall results provide some relief after several months of mixed data raised questions about whether residential construction was heading into a deeper slowdown. While housing starts have bounced around this year instead of accelerating, economists don't expect the industry to collapse like it did in the mid-2000s.
Information for this article was contributed by Christopher Rugaber of The Associated Press and Shobhana Chandra of Bloomberg News.
Business on 12/19/2018