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Economy in Brief

U.S. Housing Starts Improve Modestly
by Tom Moeller December 16, 2009

The recent recovery in home building has been hardly ebullient. Housing starts rose 8.9% last month to 574,000 (AR) units versus 527,000 during October, which was revised down slightly. These levels were, however, 6.2% below the 3Q average and remain down 12.4% y/y. More sobering is the startling decline in housing in recent years. Since the peak in January of 2006, starts have fallen by more than three-quarters. November's figure fell short of Consensus expectations for 578,000 starts.

Last month, starts of single-family homes recovered merely 2.1% to 482,000 after October's 7.1% decline. So far this quarter, starts have fallen 4.2% from the 3Q average. Despite this loss of forward momentum, single-family starts have recovered from 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. The increase in starts of single-family units was contained to the Southern (12.9% y/y) and the Western (2.1% y/y) regions of the country. Elsewhere, starts in the Northeast (2.1% y/y) and in the Midwest (-13.6% y/y) fell month-to-month.

A bit firmer were starts of multi-family units which nearly doubled m/m during November from their record low. Starts of apartments, condominiums & town houses still were down 79.6% from the January 2006 peak.

Perhaps more strength in starts is coming. Building permits rose 6.0% during November to their highest level in twelve months. As with starts, permits to build a single-family home have been relatively strong versus the total. Moreover, they rose 5.3% versus 3Q they have risen 38.3% from the January low.

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

Housing's Great Fall: Putting Household Balance Sheets Together Again from the Federal Reserve Bank of St. Louis is available here

Housing Starts (000s, SAAR) November October September Nov. Y/Y 2008 2007 2006
Total 574 527 586 -12.4% 900 1,342 1,812
Single-Family 482 472 508 5.5 616 1,036 1,474
Multi-Family 92 55 78 -53.5 285 306 338
Building Permits 584 551 575 -7.3 895 1,392 1,844
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