Demand for Rentals Drives Big Rise in Home Building .

Residential construction surged in November, sparking cautious hope that the U.S. housing market is gaining traction. Housing starts hit a seasonally adjusted annual rate of 685,000 units, the highest level in 19 months, the Commerce Department said Tuesday. Starts in November were up 9.3% from October and 24.3% ahead of the November 2010 figure. While those gains are sizable, starts remain well below the one million to 1.5 million annual pace needed for a healthy market. "The upshot is that, while the latest figures are very encouraging, we aren't getting too carried away about the prospects for home building," Paul Diggle, an economist at Capital Economics, wrote about the data. "Housing starts will continue to improve, but they may not return to the one million mark until 2015 at the earliest." Much of November's increase came from the construction of apartments, town houses and other multifamily developments, evidence that rising demand for rental housing has encouraged developers to begin building again.

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