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Economy in Brief

Surprising Rebound In U.S. Housing Starts Owes To Multi-Family
by Tom Moeller March 17, 2009

The severe downturn in housing starts took a breather last month as starts of multi-family homes nearly doubled. The Commerce Department indicated that total housing starts for February rose 22.2% from January to 583,000 (AR). January starts were revised up slightly and the latest figure compares to Consensus expectations for 450,000 starts.

Starts of multi-family homes rose 82.3%. That followed four consecutive months of sharp decline and returned starts to the highest level since October.

More indicative of the condition of the housing market is starts of single-family homes. Though they rose 1.0% last month to 357,000 (AR), starts remained near the record low for the series which dates back to 1959. The latest level is down eighty percent since the peak in early 2006. Permits to build single-family homes, a leading indicator of starts, rose and reversed their January decrease. However, they remained off by more than one-third over just the last three months. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.

By region, starts of single-family units in the Northeast reversed their January collapse and rose by 54.2%. Nevertheless, that gain left them still off by nearly one half from the year ago level. Starts in the Midwest rose a lesser 12.8% (-51.8 % y/y) after their sharp 21.7% January falloff. In the South, starts also reversed the January decline and rose a modest 2.5% (-45.7% y/y). In the West, starts ran counter to the m/m trend in the rest of the country and fell by nearly one quarter (-62.7% y/y). That followed a slight January increase.

The housing starts figures can be found in Haver's USECON database.

Quick Exits of Subprime Mortgages from the Federal Reserve Bank of St. Louis is available here.

Facts and Myths about the Financial Crisis of 2008 from Federal Reserve Bank of Minneapolis is available here.

Housing Starts (000s, SAAR) February January December Y/Y 2008 2007 2006
Total 583 477 558 -47.3% 903 1,341 1,812
Single-Family 357 353 394 -50.6 617 1,034 1,474
Multi-Family 226 124 164 -41.3 286 307 338
Building Permits 547 531 547 -44.2 880 1,389 1,844
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