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US Housing Starts Rise Nearly 30 Percent YOY

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US Housing Starts Rise Nearly 30 Percent YOY

Privately-owned housing starts in the United States rose to a 1.09 million annualized rate in November, the highest level in more than five years.

Housing starts increased 22.7 percent over the previous month and 29.6 percent over year-ago levels, according to the Commerce Department. The rate of growth exceeded forecasts by a considerable margin. New housing starts are used to gauge demand in the residential real estate market.

Housing starts in November increased in three of the four regions, led by the Midwest and South, where groundbreaking soared 41.5 percent and 38.5 percent, respectively. Starts increased 8.8 percent in the West and declined 29.4 percent in the North East.

The report comes just one day after the NAHB reported the highest level of confidence among US homebuilders in eight years. Confidence rose as a result of current sales, higher sales expectations and growing buyer traffic, which are expected to offset the spike in mortgage rates.

Permits for construction projects declined 3.1 percent over the previous month, but held near a five-month high, according to the Commerce Department. Building permits increased 7.3 percent from year-ago levels, as growing demand continues to drive plans for future projects.

“The economy seems to be picking up and there’s quite a lot of pent-up demand,” said David Sloan of 4Cast Inc. The housing market “will prove resilient” even if the Federal Reserve decides to taper the $85 billion pace of asset purchases.

The Federal Open Market Committee wraps up its two-day policy meetings on Thursday. The Fed’s Ben Bernanke is expected to announce no changes to record stimulus in what will be his last press conference as Chairman. Current Vic-Chair Janet Yellen will relieve Bernanke of his duties in February.

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