Implications: Home building continued to recover in August. Although housing starts came in less than the consensus expected, they were still up 2.3% in August and up 29.1% from a year ago. The gain in August was all due to a 5.5% rise in single-family starts; multi-family starts, which are very volatile from month to month and which increased rapidly earlier in the summer, declined 4.9%. As the top chart to the right shows, both single-family and multi-family housing starts are trending higher. Although permits to build homes fell 1% in August, they still beat consensus expectations and are up substantially in the past year, 19.3% for single-family homes and 34.7% for multi-family units. The total number of homes under construction (started, but not yet finished) increased for the 12th straight month, the first time this has happened since back during the building boom in 2003-2004. Based on population growth and "scrappage," housing starts will eventually rise to about 1.5 million units per year (probably by 2016), which means the recovery in home building is still very young. Don't expect a straight line recovery, there will be zigs and zags along the way, but the overall trend will continue to push higher. For a little more on housing, please see an interview this morning on Bloomberg TV here.
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Posted on Wednesday, September 19, 2012 @ 12:26 PM
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