WASHINGTON (AP) — The Commerce Department reports on U.S. home construction and permits approved in November. The report will be released at 8:30 a.m. Eastern time Wednesday.
MODEST GAIN FOR HOME CONSTRUCTION: Economists forecast that builders broke ground in November on a seasonally adjusted annual rate of 918,000 homes. That would be a 4 percent increase from August's pace of 883,000 and the most since May.
The report will also include figures for September and October, which were delayed by the government shutdown in October.
PERMITS RISE: The government did release data last month on permits issued for construction in September and October. Those figures showed that total permits issued jumped 6.2 percent in October to 1.03 million, up from 974,000 in September and the fastest pace in more than five years.
Big gains in permits for apartment buildings drove the increase. They rose 15.3 percent to 414,000, the most since June 2008.
Apartment building is benefiting from a surge in demand. High unemployment and lower wages have kept many Americans from saving enough to afford a house. The U.S. home ownership rate has fallen to 64 percent from 69 percent.
Permits for single-family homes ticked up in October to a seasonally adjusted annual rate of 620,000. That's still below August's level of 627,000, a five-year high. It also matches the level reached in May.
SLUGGISH GAINS FOR SINGLE-FAMILY HOMES: The fact that single-family permits have been flat since May suggests builders aren't rapidly increasing new-home building.
But economists at JPMorgan forecast that single-family starts will creep up to 635,000 in November, from 620,000 in August. That's a sign that higher mortgage rates haven't caused builders to pull back.
The average rate on a 30-year mortgage fell to 4.42 percent last week. That's down from a peak of 4.6 percent in August.
Rates jumped by more than a full percentage point over the summer after Federal Reserve Chairman Ben Bernanke suggested that the Fed would pull back on its $85 billion bond-buying program before the end of the year. The Fed will conclude a two-day meeting Wednesday, but most economists expect it won't start reducing its purchases until January or March.
Meanwhile, homebuilders are more confident, a sign construction could pick up. The National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday, matched an eight-year high first reached in August.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.