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Economy in Brief

U.S. Housing Starts Recover Modestly
by Tom Moeller June 16, 2009

Though housing starts posted a gain last month, the rise was modest and it suggests that the U.S. housing sector remains under pressure. Total housing starts recovered from their April decline with a 17.2% m/m rise to 532,000 (AR) units. The May figure was firmer than Consensus expectations for 485,000 starts. However, despite the surprise starts remained down by nearly one-half from one year ago. The best that can be noted is that a further decline has not occurred and starts have been flat during 2009.

Starts of single-family homes posted their third consecutive monthly increase. Regardless, single-family starts remained near the record low for the series which dates back to 1959 and the latest level was down three-quarters since the peak in early-2006. 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.

Starts of multi-family homes rose by nearly two-thirds m/m to 131,000. Nevertheless, the increase failed to make up an April decline and starts of apartments, condominiums & town houses remained down by nearly half from May of last year and starts were off two-thirds from the 2006 peak.

By region, starts of single-family units last month showed broad-based gains. Single-family starts in the Midwest rose 9.4% to their highest level since November (-38.1% y/y). In the South, single-family starts made up the decline of the previous two months with a 10.6% increase off the record low (-42.4% y/y). In the West starts rose for the third straight month (-36.2% y/y). Countering these monthly increases was another decline in the Northeast which was the second in a row (-47.8% y/y).

The latest level of building permits remained near the record low last month. The 4.0% increase did not make up for declines during the prior two months and, overall, permits were down by roughly one-half from last May. Single-family home permits, a leading indicator of starts, however, ticked up 3.6% from March (-42.3% y/y).

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

Housing Starts (000s, SAAR) May April Y/Y 2008 2007 2006
Total 532 454 -45.2% 900 1,342 1,812
Single-Family 401 373 -40.9 616 1,036 1,474
Multi-Family 131 81 -55.1 285 306 338
Building Permits 518 498 -47.0 895 1,392 1,844
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