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Economy in Brief

Housing Starts Unwound
by Robert Brusca January 20, 2010

Housing starts unwound in December falling by 4% on the month. Still, the drop leaves starts in a more less stabilized environment, bumping along at one of their lowest levels of the cycle. Single unit 2-4 unit and 5-unit starts are all down by some 75% to 89% from their max readings of the cycle. At the same time they are up 27% to 125% from their respective cycle lows (with the small 2-4 unit category responsible for the strong-seeming end of the range). Starts are lower across these groupings over most horizons from 3-months to 6-months to 12-months.

Starts fell in December in three of four regions, the South being the exception. The West saw a relatively small drop of 0.9% in December while the Northeast saw starts drop by 19% and the Midwest by 18.5%. The clustering of weakness in the Northeast and Midwest suggests that weather played a role as snow storms swept though the country in December on a fairly intense basis.

By regions starts are off from their respective cycle peaks ranging from a low of 71% in the South to a high of 81% in the West. The weakness has been quite uniform across the country.

One encouraging factor is that permits rose in December and did so across all four regions. While starts fell by 4% nationwide, permits rose by 10.9%.

Housing affordability remained quite good despite some minor upticks in mortgage rates. Despite the winter weather the report continues to show signs of bottoming and promise of some rebound for the months ahead as permits show steady positive momentum across all key time horizons from three- months to six months to 12-months.

Housing Starts/Permits By Region
Housing Starts: Analytical Comparisons (Pct. Changes Not Compounded)
Dec.2009
  Northeast Midwest South West
In 000's of Units Starts Permits Starts Permits Starts Permits Starts Permits
This Month:Saar  51 87 88 116 310 319 108 131
Nov.2009 63 68  108 105 300 305 109 111
Oct.2009 54 64 99 104 265 272 106 111
3-month avg. 56 73 98 108 292 299 108 118
1-mo. hg. -19.0% 27.9% -18.5% 10.5% 3.3% 4.6% -0.9% 18.0%
3-month hg -22.7% 35.9% -15.4% 17.2% 4.0% 9.2% -8.5% 9.2%
6-month hg -37.0% 50.0% -17.8% 26.1% 12.3% 4.6% -14.3% 13.9%
yr/yr hg. -19.0% 45.0% 15.8% 36.5% 9.5% 5.6% -19.4% 12.0%
Drop from Max -79.5% -71.3% -80.3% -71.6% -72.9% -71.1% -81.5% -78.8%
From Cycle Low 34.2% 64.2% 51.7% 46.8% 34.2% 22.7% 35.0% 29.7%
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