Housing Starts Rise 3.9 Percent in November

Nationwide housing starts rose 3.9 percent in November to a seasonally adjusted annual rate of 555,000 units from an upwardly revised number in the previous month, according to newly released data from the U.S. Commerce Department. This marked the first upward movement in new-home production since August, and was entirely attributable to a nearly 7 percent gain in single-family home building.

"Builders are very cautiously adding to their diminished inventories in preparation for the spring buying season and an anticipated modest revival in buyer demand when the economy shows more signs of improvement," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, we are still looking at a very low level of housing production, due largely to builders' inability to obtain construction financing."

"The modest increase in single-family starts and permits in November is consistent with a very low inventory of unsold new homes and our member surveys that have shown a degree of optimism among builders with regard to sales expectations in the next six months," said NAHB Chief Economist David Crowe. "However, builders continue to find it extremely difficult to obtain credit for acquisition, development and construction activities, and this is weighing on their ability to initiate viable new projects that could generate much-needed job growth."

The 3.9 percent gain in overall housing starts this November was due entirely to a 6.9 percent increase to a 465,000 unit seasonally adjusted annual rate of new-home production on the single-family side. Meanwhile, multifamily housing starts declined 9.1 percent to a 90,000-unit rate.

Regionally, starts activity showed gains in all but one part of the country in November. The Midwest, South and West each posted gains, of 15.8 percent, 2.3 percent and 2.1 percent, respectively, while the Northeast posted a 2.5 percent decline.

Permit issuance, which can be an indicator of future building activity, declined 4 percent to a seasonally adjusted annual rate of 530,000 units in November, its lowest level since April of 2009. However, this decline was entirely due to a 23 percent drop-off in the more volatile multifamily sector, where permits hit a seasonally adjusted annual rate of just 114,000 units. In contrast, single-family permits rose 3 percent to a rate of 416,000 units – their highest level since this June.

Regionally, permit activity was mixed in November, with the Northeast and Midwest registering declines of 8.3 percent and 22.2 percent, respectively, and the South and West posting gains of 1.9 percent and 2.7 percent, respectively.

Obama’s Pick to Lead Fannie Mae, Freddie Mac Promises Leadership

President Barack Obama’s nominee to lead Fannie Mae and Freddie Mac recently pledged to Congress to offer not just management, but leadership, if he becomes the new chief of the troubled housing agencies.
Joseph A. Smith Jr., the North Carolina banking commissioner, was in Washington most of last week, meeting with senators, congressional staff and other officials.

He recently testified before the Senate Banking Committee, the panel that will consider his nomination to be director of the Federal Housing Finance Agency. The FHFA oversees not only the two mortgage giants, but also a dozen federal home loan banks that lend to community banks across the country.

Smith’s nomination comes as Fannie and Freddie remain in federal conservatorship, receiving $151 million from the Treasury Department to maintain their work in the housing market. Obama must offer Congress a plan in January for reorganizing the agencies.

Both play a critical role in the housing market by buying bundled mortgages from lenders and keeping cash in the system.

If confirmed by the full Senate, Smith would hold much of the responsibility for carrying out Obama’s plan. “The activities of Fannie Mae and Freddie Mac are national in scope but local in impact, directly affecting communities across the country,” Smith said. “Leadership in this context means determining how to address critical local needs in conjunction with the agency’s duties of conservatorship.”

The Senate Banking Committee, and then the full Senate, must vote on Smith’s nomination this month before Congress adjourns. Otherwise, the nomination expires and Obama must put forward the name of a potential candidate again in the next Congress.

Smith faced tough questions—but no time for answers—from Sen. Richard Shelby of Alabama, the committee’s top Republican. In a hearing cut short by Senate floor votes, Shelby used his time to pepper Smith with questions, but he said he’d wait until later for written answers.

Banking Committee Chairman Christopher Dodd, D-Conn. endorsed Smith and praised his qualifications, saying in a statement that he would work with top Senate leaders to get Smith confirmed before Congress adjourns.

Smith would bring to the housing agencies his reputation as a champion for states’ abilities to protect consumers against abusive mortgage practices. He oversaw implementation of North Carolina’s laws against predatory lending, considered some of the toughest in the nation, and he testified that he worked to get “undesirable characters” out of the mortgage licensing system.

He also has supported Fannie Mae’s and Freddie Mac’s ability to support homeownership.