4 Funds To Buy As US Housing Starts Jump In November

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On Dec 17, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported that authorization of building permits for privately-owned housing units increased 6.2% in November, reaching a seasonally-adjusted annual rate of 1.639 million. The figure tops the consensus estimate of 1.568 million and October’s revised figure of 1.544 million. With the coronavirus pandemic still lingering, people continue to migrate to the lower populated suburbs. Single-family authorizations increased 1.3% in November at a rate of 1.143 million, much above the revised October figure of 1.128 million.

Additionally, the same report showed that new residential construction in America unexpectedly increased in November. Privately-owned housing starts were at a seasonally adjusted annual rate of 1.547 million for the reported month. November’s figure is a 1.2% increase from October’s revised rate of 1.528 million. The reported figure also beat the consensus estimate of 1.531 million. Single-family housing starts were at a rate of 1.186 in November, highlighting a 0.4% increase from the revised October figure of 1.181 million.

Constant rise in coronavirus cases is no doubt hindering plans of reopening the broader economy. However, such rise in infection cases has somehow been a blessing in disguise for the U.S. housing market. The current remote working trend and migration from cities to lower populated suburbs have driven demand for new houses, especially single-family home. And the record-low mortgage rates have just been an added bonus to these homebuyers.

For the week ending Dec 17, mortgage company Freddie Mac reported that the 30-year fixed mortgage rate sunk to a new record low, averaging 2.67%. The 30-year fixed mortgage has now hit a record low for the 15th time this year. As plans of an economic rebound still relies on the course of the deadly virus, the Federal Reserve has signaled at plans of keeping rates unchanged or near zero till 2024, which in turn may drag mortgage rates lower.

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