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Economy in Brief

Total Housing Starts Rise, But Single-Family Units Fall Anew
by Carol Stone January 18, 2007

December housing starts appeared to gain some forward momentum, with a 4.5% advance. The resulting 1.642M was considerably better than Consensus expectations for renewed decline to 1.563M starts.

For all of 2006 starts of 1.819M was 12.3% below the 2005 total.

However, the December increase was all in multi-family structures. These jumped 42.1% in the month to 412,000, the largest since January. Multi-family building starts have been running just below 350,000 yearly for about the last ten years.

Disappointingly, single-family starts in December turned back down again, losing 4.1% to 1.23M. For the year as a whole, they totaled 1.478M, actually an annual rate not seen since June. This is 14.0% below 2005's total; as seen in the table below, the month of December was almost 25% below December 2005..

By region, single-family housing starts in the South lost 5.7% in December (-26.3% y/y); at 642,000, this is 8.6% above October's low. Single-family starts in the Northeast were off 3.5% (-14.0% y/y). Starts in the Midwest fell 4.7% (-26.4% y/y) and out West, they managed to hold steady at 293,000 for a third consecutive month, down 23.5% December/December.

Building permits gained 5.5% in the month, but here too, the increase was mainly in the volatile multi-family sector. These permits rose 69,000 to 432,000, the best volume since August. Permits to start single-family homes edged up 1.2%, their first increase since January. For the year as a whole, these permits totaled 1.38M, down 18.0% from 2005. Total building permits for the 1.834M, down 15.1% from 2005.

New Federal Reserve Board Governor Frederic Mishkin gave his first speech as a Board Member yesterday in New York. It is titled, appropriately enough, The Role of House Prices in Formulating Monetary Policy and can be found here. Chairman Bernanke testified this morning before the Senate Budget Committee; his prepared statement, Long-term fiscal challenges facing the United States, can be found here.

Housing Starts (000s, AR) December November October Y/Y 2006 2005 2004
Total 1,642 1,572 1,478 -18.0% 1,819 2,073 1,950
  Single-family 1,230 1,282 1,187 -24.7% 1,478 1,719 1,604
  Multi-family 412 290 291 11.7% 341 354 345
Building Permits 1,596 1,513 1,553 -24.3% 1,834 2,159 2,058
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