Wednesday, February 17, 2010
The Census Bureau reported(.pdf) a larger than expected increase in housing starts last month, however, there was an equally surprisingly decline in permits for new construction, all part of what is likely to be a very long process of rebounding from record low activity in the homebuilding sector last year.
Housing starts rose 2.8 percent from an upwardly revised level of 575,000 units in December to 591,000 in January, up 21 percent from a year ago but down 74 percent from the peak in early-2006. New construction of multifamily dwellings rose 9.2 percent and single-family starts rose 1.5 percent.
Permits for new construction, a leading indicator for the homebuilding industry, fell 4.9 percent from December to January, from 653,000 units into 621,000, an increase of 17 percent from a year ago but down 73 percent from the highs seen in late-2005 at the height of the housing bubble.
Given that there are now millions of homes working their way through the foreclosure process, set to hit the resale market in the year or two ahead, don't look for much of an improvement in the business of home construction for a while.