Housing starts recovered from last month’s unexpected drastic drop, rising to a seasonally adjusted annual rate of 1.173 million in November, which is 10.5% above the revised October estimate 1.062 million, the Census Bureau and the Department of Housing and Urban Development reported.

This is 16.5% below the November 2014 rate of 1.007 million.

“The housing market continues to show signs of durability and resilience with November housing starts rebounding from a disappointing drop in the previous month,” Quicken Loans Vice President Bill Banfield said.  

“The choppy monthly numbers have been on a gradual trend in a positive direction and the strong monthly permits bodes well as we enter the new wave of interest rate increases by the Federal Reserve,” said Banfield.

Meanwhile, building permits in November were at a seasonally adjusted annual rate of 1.289 million, up 11.0% from the revised October rate of 1.161 million and up 19.5% from the November 2014 estimate of 1.079 million.

Privately owned housing completions in November were at a seasonally adjusted annual rate of 947,000, down is 3.2% from the revised October estimate of 978,000 but up 9.2% from the November 2014 rate of 867,000.

This is one of the last housing reports before the Federal Reserve announced whether or not it will raise interest rates.

According to the most recent speech from Fed Chair Janet Yellen in a Congressional committee hearing on the U.S. economy, Yellen said the current outlook and the flow of data since the central bank's last meeting in October are "consistent" with the rate hike criteria spelled out by U.S. policymakers.

“Stronger-than-expected housing reports this morning suggest continued underlying momentum in the US housing market, at least for now,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “As the Fed presumably embarks on liftoff, however, higher rates will eventually translate into downward pressure on the consumer or more specifically the consumer’s ability to finance large ticket items such as autos and homes slowing both purchasing and construction activity.”

And while a 25bps increase in rates is unlikely to markedly influence activity, Piegza said, “Subsequent rate increases from this point on will, at some point, have a profound impact on financing rates raising the average monthly cost of a mortgage by potentially hundreds of dollars. Without corresponding income growth, a rising rate environment is likely to have a meaningful, downward impact on housing market activity.”