WASHINGTON -- Builders in November capped the strongest three months for residential construction in four years, and permits climbed as record-low borrowing costs buoyed the U.S. housing market.
Starts fell 3 percent to a 861,000 annual rate from a revised 888,000 annual pace in October, the Commerce Department reported Wednesday.
The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013.
Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008, Commerce Department figures also showed Wednesday.
Low mortgage rates and an improving job market are boosting builders such as Toll Brothers Inc. (NYSE: TOL), which are now able to raise prices as sales climb and inventory shrinks.
Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013.
“Housing is no longer a net negative dragging down the economy,” Lindsey Piegza, an economist with FTN Financial in New York, said before the report. “It’s taking clear steps in the right direction. We’re starting to see very clear signs of modest, slow recovery.”
The prior month was revised down from a previously reported 894,000 pace.
The average rate of housing starts from September through November was the strongest since the three months ended August 2008.
The number of building permits issued climbed 3.6 percent in November to an 899,000 annual rate, the most since July 2008.
Construction of single-family houses fell 4.1 percent to a 565,000 rate.
Work on multifamily homes, such apartment buildings, dropped 1 percent to an annual rate of 296,000.
Two of four regions showed a decrease in starts last month, led by a 19.2 percent drop in the West.
The Northeast region saw a 5.2 percent decrease, while the Midwest climbed 3.3 percent and the South rose 2.9 percent.
Confidence among homebuilders climbed in December for the eighth straight month, reaching its highest level in more than six years, the National Association of Home Builders/Wells Fargo reported Tuesday.
Other related businesses are also seeing a pickup.
Billings by architecture firms increased in November at the fastest pace in five years, a report from the American Institute of Architects showed Wednesday.
The group’s billings Index climbed to 53.2 last month, the highest level since November 2007, from 52.8 in October. Readings above 50 signal an increase in activity.
The gauge has advanced for six consecutive months, the longest winning streak in its 17-year history.
Commodity markets are also being influenced.
Lumber futures Tuesday rose to a six-year high, extending a 2012 rally that is one of the biggest among commodities.
Prices have surged 37 percent this year, more than any of the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index.
Construction is aiding the economic expansion as the Federal Reserve continues its unprecedented asset-purchase program and holds rates to historic lows.
For those who can qualify, declining mortgage costs are making it cheaper to buy a house.
The average rate on a 30-year, fixed loan was 3.32 percent last week, compared to 3.94 percent a year ago, according to Freddie Mac (OTC: FMCC).
The rate reached 3.31 percent in late November, the lowest in weekly data back to 1972.
Toll Brothers, based in Horsham, Pa., plans to open 77 new communities in fiscal year 2013 as sales and prices rise, Chairman Robert I. Toll said.
“There is hardly anyone who owns a home, lives in a home, or thinking of buying a home that doesn’t understand that home prices have gone up a decent amount in this past year,” Toll said Dec. 4. “You take a $500,000 house, you’re up $20,000, $18,000. It’s not chicken feed. And I think that reverberating back through the populace that’s interested in new homes, motivates, and inspires additional demand. And with additional demand, you will get additional prices.”