 | Housing starts declined 4.3% in December to 529,000 units at an annual rate |
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Implications: So much for global warming lifting housing activity and slowing utility output in the winter months. The unusually harsh weather in December – colder than normal temperatures and more snow – pushed up utility output (reported last week) and also slowed housing starts. But weather-related shifts are all about timing, not the overall level of activity. We expect a bounce in starts in the months to come as the weather gets back toward normal. Single-family housing starts fell 9% in December, with that drop concentrated in the Northeast and South, exactly where you would expect given the weather patterns. Home completions, which are not as vulnerable to bad weather, increased in December, both for single- and multi-family units. Meanwhile, building permits spiked steeply upward in December. Much of this was due to changes in building codes in California, Pennsylvania, and New York that went into effect on January 1. Builders could avoid the tighter rules by breaking ground before 2011. However, building codes only explain the gain in multi-family permits. Single-family permits also increased 5.5%, signaling a rebound in home construction in 2011. That said, given ongoing foreclosures and the rise in rental occupancy, we expect the growth of multi-unit dwellings to keep outpacing the growth of single-family homes. In other recent news, the Empire State Index, a measure of manufacturing in New York, increased to +11.9 in January from +9.9 in December, signaling a continuation of the national gains in manufacturing.
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