Wikinvest Wire

Housing starts rebound - don't get too excited

Tuesday, March 17, 2009

The Commerce Deparment reported(.pdf) that housing starts rose for the first time in eight months, up 22.2 percent in February from record lows in January, largely as a result of a rebound in condominium and apartment building.
IMAGE While a 22 percent gain sounds impressive, it is important to recall just how low last month's record low numbers were.

Housing starts rose from an annualized, seasonally adjusted rate of 466,000 in January to a rate of 583,000 last month, but the January totals were a full 42 percent below the previous record low of 798,000 in January of 1991, a rate that is not adjusted for the increase in population.

This data series goes all the way back to 1959 and to see the rate of housing starts averaging well over a million units for five decades gives the February figure of 583,000 a very different connotation than when simply comparing the total to January.

On a year-over-year basis, housing starts fell 47.3 percent.

Building permits, a forward looking indicator for new construction, rose 3.0 percent in February, from a rate of 521,000 to 547,000, and are now down 44.2 percent from a year ago.

Record foreclosures and an increasing number of sales of bank owned properties have undercut builder prices for many months now with almost 300,000 homes entering some stage of foreclosure in February. This adds to the growing inventory of bank owned properties, most of which have remained off of the resale market according to RealtyTrac, a California-based provider of default data.

Yesterday's National Association of Home Builders housing market index remained near record lows, buyer traffic worsening in the latest report, as the near-term outlook for homebuilders remains grim.


Anonymous said...

Can someone tell me how a 3% jump in building permits creates a 22.2% jump in housing starts? Answer: IT DOESN'T YOU MORONS!! If a house or unit is being constructed, it doesn't matter what city or county you're located in the U.S., YOU MUST HAVE A PERMIT TO BUILD!!

A 3% jump in pemits does not equal a 22.2% gain in housing starts. Look at the chart for crying out loud!!

Anonymous said...

Wow. What an insightful comment and stated with such conviction. We should fell blessed that you've stopped by.

Anonymous said...

"A 3% jump in pemits does not equal a 22.2% gain in housing starts. Look at the chart for crying out loud!!"

If you see it on a month-to-month basis, it does not. However, many of those who got those housing starts in the past were sitting waiting for the market to improve. So the 22.2% represents the accumulation of over several months of waiting time.

I'm Not POTUS said...

How many of those starts were done to avoid losing the permit and the fees and financing that went with them.

An unsellable project is even more worthless if you loose permits and entitlements.

I guess now we have to track permit closings to figure out if there is growth.

Anonymous said...

Correct me if I am wrong but it only takes one building permit to build a condo tower.

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