By Vicki Needham - 12/18/13 11:44 AM EST
Home building hit a five-year high in November as the housing market recovery picks up pace heading into next year.
Construction on single-family and apartment homes rose 22.7 percent to a seasonally adjusted rate of 1.09 million, well above October's 889,000 pace and the best showing since February 2008, the Commerce Department reported Wednesday.
"Single-family and multifamily starts are at five-year highs, providing additional evidence that the recovery is here to stay," said David Crowe, chief economist for the National Association of Home Builders.
"We hit a soft spot this fall when interest rates jumped and the government closed down, but mortgage rates still remain very affordable and pent-up demand is helping to boost the housing market," he said. "We expect a continued steady, gradual growth in starts and home sales in 2014."
Meanwhile, volatile apartment construction jumped 26 percent to a 354,000 annual pace.
Building permits, which forecast future construction activity, fell 3.1 percent to 1.007 million, down from 1.04 million in October, which is 7.9 percent above October 2012 levels.
This is the second month that permit issuance topped the million mark.
Single-family permits were up 2.1 percent in November, while requests for multifamily units fell.
"This report is in line with our latest survey, which shows that builders are increasingly confident that buyers who have sat on the sidelines are feeling more secure about their economic situation and are now moving to purchase new homes," said Rick Judson, chairman of the NAHB and a home builder from Charlotte, N.C.
"This upward trend could be even stronger if not for persistently tight lending conditions for buyers and builders facing rising costs for building materials, lots and labor."
In a separate report on Tuesday, builder confidence rose four points in December as home buyers returned to the market after the 16-day government shutdown created uncertainty, a good sign heading into 2014.
Home construction made big leaps in a couple of regions — up 41.7 percent in the Midwest and 38.5 percent in the South. Construction rose 8.8 percent in the West but dropped 29.4 percent in the Northeast.
Permits were up in only one region — 7.8 percent in the Northeast. But they fell 7 percent in the South, 0.4 percent in the West and 0.6 percent in the Midwest.