By Sarah Chaney and Sharon Nunn

U.S. housing starts rose in November, reflecting a large climb in apartment building that masked weakness in single-family home construction.

Housing starts increased 3.2% in November from the prior month to a seasonally adjusted annual rate of 1.256 million, the Commerce Department said Tuesday. Residential building permits, which can signal how much construction is in the pipeline, grew 5.0% from October to an annual pace of 1.328 million last month.

Economists surveyed by The Wall Street Journal had expected a 0.7% decrease for starts and a 0.2% decline for permits.

Housing-starts data are volatile from month to month and can be subject to large revisions. November's 3.2% rise for starts came with a margin of error of 9.8 percentage points.

The broader trend shows starts rose by 5.1% in the first 11 months of 2018 compared with the same period a year earlier.

Starts for buildings with two or more units clocked a 22.4% rise in November from the previous month, reflecting some payback after declining earlier this fall. Single-family construction, which has stagnated this year after steadily climbing throughout the expansion, dropped for the third consecutive month.

Weakness in construction of single-family homes underscores heightened affordability concerns among home builders, who face rising material and labor costs. On Monday, the National Association of Home Builders reported that home-builder confidence in December fell to its lowest level since May 2015.

The decline in home building was particularly acute in the pricey West market, where single-family starts posted the largest monthly drop since 2009.

Despite strong economic growth and a historically low unemployment rate, factors that should support home-buyer demand, a shortage of inventory and rising borrowing costs have locked out many would-be buyers.

Write to Sarah Chaney at sarah.chaney@wsj.com and Sharon Nunn at sharon.nunn@wsj.com

(END) Dow Jones Newswires

December 18, 2018 08:45 ET (13:45 GMT)

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