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Economy in Brief

U.S. Housing Starts Inch Higher During September But Are Flat Over Last Four Months
by Tom Moeller October 20, 2009

Continuing to show a loss of forward momentum was the housing sector. Housing starts ticked up slightly last month to 590,000 (AR) units versus 587,000 during August which was revised down slightly. The latest level, however, showed no growth from June. In addition, September's figure fell short of Consensus expectations for 610,000 starts.

The loss of momentum owes to weakness in the multi-family sector where starts fell 15.2% m/m during September. That decline reversed roughly all of the August increase and left multi-family starts near the postwar low. Starts of apartments, condominiums & town houses remained down by roughly two-thirds from the 2006 peak.

Starts of single-family homes have shown more life recently. Single-family starts rose 3.9% last month to 501,000 units (AR) and reversed most of an August decline. They are now 40% above the low of this past winter. 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 last month were mixed. Single-family starts in the Northeast rose 13.0% to nearly their highest level since October (-8.8% y/y) while starts in the South also rose 14.3% (-5.9% y/y) to their highest level since last September. In the Midwest, starts posted a 5.7% (-4.6% y/y) decline after a dip during August and starts in the West fell 14.4% (-18.8% y/y) to their lowest level since May.

Building permits fell 1.2% and gave back much of their increase during August. Permits remained just above their record low and were down by roughly one-half from last May. As with starts, permits to build a single-family home have been relatively strong, despite a moderate 3.0% decline during September. A leading indicator of starts, permits are one-third higher than their winter low.

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

Housing Starts (000s, SAAR) September August Y/Y 2008 2007 2006
Total 590 587 -28.2% 900 1,342 1,812
Single-Family 501 482 -8.7 616 1,036 1,474
Multi-Family 89 105 -67.4 285 306 338
Building Permits 573 580 -28.9 895 1,392 1,844
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