Wikinvest Wire

Housing starts rise - don't get too excited

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.
IMAGE 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.

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Anonymous said...

Drivel from Bloomberg:
“The housing recovery is under way,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “Housing starts may be sluggish in the near term until sales pick up and builders gain more confidence about the outlook.”

Anonymous said...

Check out the latest Forbes Magazine, where lil' Steven says that unless we start building more new home's well see a shortage of homes next year. WTF?

Charles said...

I don't know if anyone bothered to actually read the report, but the 90% confidence interval for housing start increases is 2.8% ±11.5%; in other words, there's no statistical evidence that the increase actually occurred, at all.

I did a full write up on the statistics on Asset Prime:

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