WASHINGTON – U.S. permits for future home construction set their fastest pace in nearly 4-1/2 years in November, pointing to underlying strength in the housing market, even as starts dropped after three straight months of strong gains.
The Commerce Department said on Wednesday building permits increased 3.6 percent to a seasonally adjusted annual rate of 899,000 units, the highest since July 2008.
Economists polled by Reuters had expected permits, which lead starts by at least a month to rise to an 875,000-unit pace last month from 868,000 units in October.
Groundbreaking fell 3.0 percent to an 861,000-unit pace, worse than economists' expectations for a pullback to 873,000 units. October's starts were revised down to show an 888,000-unit pace instead of the previously reported 894,000 units.
The step back in homebuilding in November followed three straight months of solid gains, and reflected a 5.2 percent drop in the Northeast, which was slammed by Superstorm Sandy in late October. Starts also tumbled 19.2 percent in the West.
The housing market has regained some footing after a historic collapse that pushed the economy into its worst recession since the Great Depression.
That firming trend was reinforced by a report on Tuesday showing builders' confidence in the market for new single family homes rose this month to its highest level in more than 6-1/2 years.
Homebuilding is expected to add to gross domestic product growth this year for the first time since 2005.
Last month, groundbreaking for single-family homes, the largest segment of the market, fell 4.1 percent to a 565,000-unit pace. Starts for multi-family homes slipped 1.0 percent to a 296,00-unit rate.
Permits to build single-family homes dipped 0.2 percent last month to a 565,000-unit pace. Permits for multi-family homes increased 10.6 percent to a 334,000-unit rate.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)