Home building slows in November

The home-building business is closing the year on a down note.

Housing starts and building permits both fell in November, the Commerce Department reported Tuesday. Analysts had expected modest gains.

The number of building permits issued dipped 5.2 percent from its six-year high recorded in October, while housing starts – which counts the actual beginning of construction – declined 1.6 percent. Both measures also fell below levels seen in November 2013.

The fall in housing starts was sharper for single-family homes, reflecting continued softness in the new-home industry as buyers struggle with higher prices and builders cater largely to the higher end of the market. Through November permits for single-family homes are up just 1 percent from last year’s figure, far below historical averages.

Weather may have been a factor, said Patrick Newport with IHS Global Insight, as it was the coldest November in 14 years. Weak wage growth is likely a bigger factor, as the figures indicate very little spec construction by homebuilders.

The data “implies that most of the time, ground is not broken until the builder has found a buyer for the property,” Newport wrote.

Construction of apartment buildings has been stronger, as builders try to attract a growing population of renters. Permits for buildings with five or more units is up 14.1 percent year-to-date, though the sometimes-volatile figure fell 11.1 percent in November.