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Economy in Brief

U.S. Housing Starts Fall To Their Lowest Level Since April
by Tom Moeller November 18, 2009

Housing sector activity continued to moderate after increases this past spring. Housing starts fell last month to 529,000 (AR) units versus 592,000 during September which was revised up slightly. The latest level was the lowest since April and down nearly one-third y/y. More sobering was that since the peak in January of 2006 starts have fallen by more than three-quarters. In addition, October's figure fell well short of Consensus expectations for 600,000 starts.

Loss of forward momentum was evident in the decline in starts of single-family homes. They fell 3.9% last month to 476,000 units (AR), reversed all of the prior month's increase and were at the lowest level since May. Despite these disappointments, however, single-family starts were one-third higher than the February low. 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.

A further loss of momentum was evident in the multi-family sector where starts starts fell by one-third m/m during October to the record low. Starts of apartments, condominiums & town houses were down 88.2% from the January 2006 peak.

Starts of single-family units fell throughout the country last month. Single-family starts in the Northeast fell 9.6% (-17.5% y/y) while starts in the South fell 7.3% (-4.9% y/y). In the Midwest starts declined 4.8% (-16.8% y/y) and starts in the West fell 5.9% (-16.5% y/y) to their lowest level since May.

Building permits dropped 4.0%, the third decline in four months, but remained 10.8% above their record low reached in April. As with starts, permits to build a single-family home have been relatively strong. They fell just 0.2% last month and were down 4.0% y/y.

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

How Rigid Are Producer Prices? from the Federal Reserve Bank of New York can be found here.

Housing Starts (000s, SAAR) October Oct. Y/Y September August 2008 2007 2006
Total 529 -30.7% 592 581 900 1,342 1,812
Single-Family 476 -10.9 511 481 616 1,036 1,474
Multi-Family 53 -76.9 81 100 285 306 338
Building Permits 552 -24.3 575 580 895 1,392 1,844
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