The strong 22.7% m/m increase in housing starts in November was an encouraging sign that the rise in mortgage interest rates is not a permanent setback for the homebuilding recovery. This gain echoed the earlier rally in new home sales, which recovered from a rate-related dip in the third quarter. Although the less timely existing home sales figures are still declining, the take-home message is that housing market activity will continue rising even with 30-year mortgage interest rates a percentage point higher than they were this time last year.
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