Thursday, February 16, 2012

Housing starts are up 46% from their low

It would be hard to argue that residential construction, measured by housing starts, is not in full recovery mode. January starts were much higher than expected (699K vs. 675K), and December starts were revised up almost 5%. From the low in April '09, starts are now up by 46%. This is a recovery, and it started almost a year ago, though it has somehow managed to fly under the radar of the consensus view that the economy is very weak. The level of starts is still miserably low, of course, but we are seeing very impressive changes on the margin in this indicator. This is very good news, because it shows that builders are more confident in the future because they see a looming shortage of housing after years of extremely deep construction cutbacks. This further suggests that the underlying fundamentals of the housing market are much sounder than most believe have been led to believe. On the margin, the problem is no longer a glut of homes for sale, but a shortage of homes relative to the number of households in a position to buy them. This is very good news.


Benjamin Cole said...

Well, some good news is better than none.

BTW, the PPI out today shows active deflation in intermediate goods.

PS. I dislike the new "prove you are not a robot" letter system.

brodero said...

The number of housing starts to total nonfarm payrolls has averaged about
1.1% of payrolls. We currently averaging only .53% of nonfarm payrolls

brodero said...

Agreed eyesight is being
sorely tested

marcusbalbus said...

let's party dude. all is good.

Ed R said...

"Housing starts up 46% from their lows"

- - - - and still down 60+% from their highs.