WASHINGTON, DC—Hours before Federal Reserve Chairman Janet Yellen is due to announce whether the Fed will begin raising interest rates, news from the residential sector provides further evidence of economic improvement that may prompt the Fed to act. Led by new single-family construction, housing starts rebounded in November, with single-family posting its best results since January 2008 and multifamily up 16.4% from October, according to Commerce Department figures.

November's topline figure was an annualized rate of 1.17 million, up 10.4% from the previous month. That topped the median estimate of 81 economists surveyed by Bloomberg, which called for a rate of 1.13 million. It represented a 10.5% increase from October and a 16.4% increase year over year.

"Single-family production this month has reached levels last seen before the Great Recession, an indicator that we are making gradual headway back to a normal housing market," says David Crowe, chief economist at the National Association of Home Builders. "As we close out the year, we can see that the housing sector has made headway in 2015, and we expect the recovery to continue at a modest pace."

Also up from October were construction permits, on both a monthly and annual basis. Overall permit issuance rose 11% from the previous month to a rate of 1.289 million units in November, a figure that represented a Y-O-Y increase of about 21.4%. Multifamily permits rose 26.9% from October to a rate of 566,000 while single-family permits increased to 723,000. While representing only a 1.1% gain on October single-family permits, it represented the highest level since December 2007.

Acknowledging that the numbers can be volatile, Kristin Reynolds, US economist with IHS Global Insight, says the November gains represent "a statistically positive rate of growth." She says that robust building permits, when combined with "still reasonably elevated homebuilder optimism," provide a foundation for continued momentum in housing starts. NAHB reported Tuesday that builder confidence ticked down one percentage point to 61, although Crowe says the range over the past seven months—in the low 60s—is "in line with a gradual, consistent recovery."

Reynolds notes that November marks the second consecutive month of single-family permitting above a rate of 700,000, a result we haven't seen since January '08. "New homes for sale remain well below their long-term trend,' according to Reynolds. "We expect starts to reach a 1.3-million annualized rate in the second half of 2016 with single-family starts responsible for most of the gain."