US housing starts surge unexpectedly in November

US housing starts were higher than expected in November as mortgage rates began to soften, according to the Commerce Department.

Housing starts surged by 14.8% in November to a seasonally-adjusted annual rate of 1.56 million and against expectations of a 1.36 million rise. They were also up 9.3% year on year.

Building permits, which are seen as a forward gauge of activity, were 1.460 million were down 2.5% month on month and against estimates of 1.465 million.

"Our forecast is for housing starts to slow to a pace of 1.3mn in Q1. We don't expect the November pace of starts to be sustained, but taken as a whole, the November data, along with the recent decline in mortgage rates below 7% lend an upside risk to that forecast," said Nancy Vanden Houten, lead US economist at Oxford Economics.

"Both single- and multi-family starts posted solid gains in November and starts rose in all regions. Going forward, we think multi-family starts – where supply is more plentiful and lending standards have tightened more – are more vulnerable to a decline. Recovering homebuilder sentiment and an ongoing need for inventory should cushion the downside for single-family starts."

Reporting by Frank Prenesti for Sharecast.com