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Economy in Brief

U.S. Housing Starts Rise But Forward Momentum Is Weak
by Tom Moeller February 17, 2010

Housing starts increased a modest 2.8% last month to 591,000 (AR) units following a slightly revised decline to 575,000 during December. The small gain was only enough, however, to lift starts back to the level reached last summer. In fact, the 21.1% twelve-month increase from near the recession low pales in comparison to the 50%-90% increases following downturns since the 1970s. Since their peak in January of 2006, starts remain down by three-quarters. January's figure slightly beat Consensus expectations for 580,000 starts. 

Last month, starts of single-family homes ticked up just 1.5% to 484,000 after December's 3.0% decline. Year-to-year starts have risen by one-third but they're up just 1.5% from the 4Q average. 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 January starts of single-family units was contained by declines in the Midwest (63.0% y/y) and in the Southern (28.5% y/y) regions of the country. In the Northeast starts rose moderately m/m (82.1% y/y) and in the West starts just recouped the moderate December decline (21.7% y/y).

A 9.2% increase in starts of multi-family units added to firmer increases during the prior two months. Starts of apartments, condominiums & town houses still were down 76.2% from the January 2006 peak.

Despite a moderate 4.9% m/m decline, January building permits remain up by one-quarter from their low last March. Permits to build a single-family home rose slightly m/m and have risen one-half from their low last January.

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

Mortgage Choice and the Pricing of Fixed-Rate and Adjustable-Rate Mortgages from the Federal Reserve Bank of San Francisco is available here.

Housing Starts (000s, SAAR) January December November Nov. Y/Y 2009 2008 2007
Total 591 575 579 21.1% 553 900 1,342
Single-Family 484 477 492 35.6 440 616 1,036
Multi-Family 107 98 87 -18.3 113 285 306
Building Permits 621 653 589 16.9 558 895 1,392
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