A day after the NBER finally declared that the 'Great Recession' had officially ended (a year ago), U.S. housing, where it all began, came out and handily beat expectations. U.S. housing starts leaped 10.5% in August (I love how that sounds) to 598,000 units annualized.
Frankly, expectations were not exactly buoyant after yesterday's once-again disappointing homebuilders' confidence survey.) The fact that July's figure was revised down by 5,000 units didn't matter as the August headline was the highest since April, leaving starts 2.2% above a year ago. Now, we may be 74% from the unsustainable highs but at least we are 25% above April 2009's record low of 477,000 units.
Note that the U.S. had its lowest level of rain in a decade during the month, so that may have helped somewhat. Nonetheless, the headline increase shows that there is still some demand out there, regardless.
The gains were spread out between not only multis, but the more-important singles component as
well. Indeed, the 4.3% increase in starts of single-units was the first in four months, a good indication of some stability coming into play. And all regions of the country partook in the gains, with the Northeast the exception. In an indication of future housing activity, building permits grew 1.8% in August, although the still-low level is 6.7% below a year ago. But alas, it cannot be all good news.
Permits for singles slid for the 5th straight month, down 1.2% 401,000 a.r., the lowest in 16 months.
The Bottom Line: Housing starts have stabilized over the last couple of years, but at levels which are still too weak. And there is still the issue of the number of existing homes that still remain on the market (or have yet to be listed).
But with the number of new homes for sale at the lowest level in four decades and mortgage rates at record lows, some demand for construction is being sparked. And that is something to write home about.
Jennifer Lee
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