U.S. housing starts rose 8% in November, more than expected, but economists are restraining their enthusiasm.

“The figures failed to be market moving for three reasons. First, the increase was in the volatile multi-family component, where rising vacancies suggest an upward trend is unlikely to be sustained. Second, a jump in mortgage rates has made the upside in the more important single-family component uncertain. And third, temperatures were 9 degrees higher than last year in the U.S. for November as the weather approached ‘record mild’,” says BMO Nesbitt Burns.

The trend in housing next year will likely be the mirror image of bond yields, BMO predicts. “If the overall economy does very well, and interest rates rise, the strong housing sector may finally subside after many good years in a row.”

RBC Financial Group economists note that while November’s pace was the fastest since July, October’s total was revised down to a 4% decline from -1.3% previously.

“Nevertheless, blame it on good weather if you want but November’s rise in housing starts ranks alongside the recent record auto sales as yet another incongruous element of this most peculiar U.S. recession — one in which consumer spending is soaring. The near-term housing outlook remains bright: building permits rose 5.3% in November. Expect weaker numbers later next year as mortgage rates rise.”

BMO says, “The Homebuilders’ survey was upbeat for December and we would not look for the rise in long-term rates seen lately to have an immediate and material impact on housing starts. If long-term rates stick at currently lofty levels, however, and if the weather turns colder than normal in Q1, the industry is set up for a large decline.”