November housing starts increased by +3.2% compared to October to a seasonally adjusted annual rate of 1,256,000, but the jump was due to a +24.9% increase in buildings with 5 or more units to 417,000, which was offset by a -4.6% decline in single family construction to 824,000 units. On a yearly basis, the decline in new single family home construction was even more pronounced, dropping -13.1%, while multiple unit construction increased +20.2%. Construction picked up in the South, with a +15.1% overall monthly gain, including a +6.8% gain in single family construction, but decreased significantly in the West at -14.2% overall, including a -24.4% drop in single family construction.

The Federal Open Markets Committee (FOMC) noted that the unemployment rate remained low, household spending continued to grow strongly, and inflation remained near their 2% target, although the pace of business fixed investment had moderated compared to its rapid pace earlier in the year. Based on the current situation, the FOMC voted to increase the target federal funds rate by +0.25%, for a range from 2.25% to 2.5%, raising it out of the range of accomodative interest rates to the lower end of neutral rates. Updates to future economic projections for 2019 lowered the number of rate increases from 3 to 2, dropped projected GDP from 2.5% to 2.3% and decreased core inflation estimates from 2.0% to 1.9%. Economic projections for the longer run increased GDP by +0.1% to 1.9%, lowered unemployment -0.1% to 4.4%, and dropped the federal funds rate by -0.25% to a range of 2.75% - 3.0%.

Personal income rose +0.2% in November, slowing from October’s +0.5% increase, while personal consumer expenditures rose +0.4%, with the difference made up by a -0.1% drop in the personal saving rate to 6.0%. Tax and inflation adjusted income nudged past an inflation adjusted +0.1% increase in prices for a +0.2% monthly gain, staying at the same +2.8% yearly increase seen in October. Core prices, which exclude food and energy, also rose +0.1% for the month, dropping overall yearly prices by -0.2% to +1.8%, and raising core prices by +0.1% to a +1.9% yearly increase.