New residential construction in the U.S. saw a steep drop in the month of November, according to a report released by the Commerce Department on Friday.
The report said housing starts plummeted by 18.7 percent to an annual rate of 1.090 million in November from the revised October estimate of 1.340 million.
Economists had expected housing starts to dip to a rate of 1.230 million from the 1.323 million originally reported for the previous month.
The much bigger than expected pullback came after housing starts surged up to their highest level since July of 2007 in October.
Multi-family starts plunged by 45.1 percent to a rate of 262,000, while single-family starts fell by 4.1 percent to a rate of 828,000.
The report also showed a steep drop in housing starts in the Northeast, which slumped by 52.1 percent. Housing starts in the West also tumbled by 22.1 percent, while starts in the Midwest and South slid by 14.2 percent and 9.3 percent, respectively.
Building permits, an indicator of future housing demand, also fell by 4.7 percent to a rate of 1.201 million in November from a revised 1.260 million in October.
The drop in building permits came as a surprise to economists, who had expected permits to rise to a rate of 1.240 million from the 1.229 million that had been reported for the previous month.
The unexpected decrease in building permits came as multi-family permits tumbled by 13 percent to a rate of 423,000. On the other hand, single-family permits inched up by 0.5 percent to a rate of 778,000.
On Thursday, the National Association of Home Builders released a separate report showing a significant improvement in homebuilder confidence in the month of December.
The report said the NAHB/Wells Fargo Housing Market Index jumped seven points to 70 in December, reaching the highest reading since July of 2005.
by RTT Staff Writer
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