The extreme lack of existing inventory on the market continued to support newbuild demand and construction activity in November, as single-family starts jumped to an 18-month high. The rise is at odds with the stabilisation in new home sales and slowdown in building permit issuance in recent months, so we suspect it will be at least partially reversed in December. (See Chart 1.) But the big picture is that with mortgage rates falling and inventory tight, housing starts are likely to stay a lot stronger than they were in the second half of 2022.
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