3 Stocks To Buy As Housing Starts & Permits Rise In November

After the sharp plunge in October, housing starts rebounded in November while building permits also increased. The robust data clearly suggests expectation of a steady housing recovery in 2016 despite the possibility of mortgage rates rising as a result of the Fed rate hike announced on Wednesday.

Data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau showed that housing starts rose 10.5% to a seasonally adjusted annualized rate of 1.17 million units in the last month from the revised October reading of 1.06 million.

Single-family housing starts rose 7.6% in the month, while multi-family starts jumped 18.1%. Moreover, housing starts went up 16.5% year over year.

The number of building permits — a gauge of future constructions — increased 11% in November from the prior month suggesting that builders expect steady sales. Building permits for single-family and multi-family homes grew 1.1% and 30.8%, respectively. Moreover, permits surged 19.5% year over year.

The robust starts data comes a day after numbers released by the National Association of Home Builders (NAHB) showed that homebuilders’ sentiment index slipped one point to 61 in December. Nonetheless, the index was still above 60 for the 7th month, suggesting that overall housing recovery remains on track.

2015 has generally been a good year for the housing market. After a lull in the U.S. housing space in the first quarter, sales picked up in the ensuing months amid an improving economic environment and a better employment picture. Higher job numbers, a recovering economy, moderating home price gains, rapidly rising household formation, affordable interest/mortgage rates, rising rentals, and a limited supply of inventory –all point to continued strong momentum in 2016.

Heightened home construction activity is also spurring demand for homebuilding materials. This is, in turn, boosting the growth prospects of companies manufacturing these products. Construction material companies like Vulcan Materials Company (VMC - Analyst Report) and Eagle Materials Inc. (EXP - Snapshot Report); building product makers like Masco Corp. (MAS - Analyst Report) and Headwaters Inc. (HW - Snapshot Report); equipment rental companies like United Rentals, Inc. (URI - Snapshot Report); engineering design firms like AECOM (ACM - Analyst Report) and KBR Inc. (KBR - Analyst Report) and security products and solutions provider Allegion plc ALLE are well poised for growth.

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