Implications: The housing recovery continues to build momentum and has much further to go. Housing starts rose 0.8% in February, with gains for both single- and multi-family starts. Single-family starts are up 31.5% from a year ago and the highest since mid-2008. Multi-family starts, which can be very volatile from month to month, are up 20.6% from a year ago. The total number of homes under construction (started, but not yet finished) was up 2.3% in February and is up 27.8% from a year ago. The most bullish part of the report was that building permits increased 4.6% in February and are up 33.8% from a year ago, signaling continued growth in home building. As the two charts to the right show, the underlying trend is clearly upward for home building. We think it will remain so for the next few years. Based on population growth and "scrappage," housing starts will eventually rise to about 1.5 million units per year (probably by 2015). In other recent housing news, the NAHB index, which measures confidence among home builders, slipped to 44 in March from 46 in February. The indexes for future sales and foot traffic increased, but the index for current sales declined. Don't get worked up about this dip; given the improvement in the forward-looking parts of the report, look for a rebound in the overall index next month. The bottom line is that housing construction, prices, and sales are well into recovery and will continue along this path for the next few years. That path will not be perfectly straight; there will be zigs and zags along the way. Just don't let those temporary deviations distract from the trend.
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Posted on Tuesday, March 19, 2013 @ 9:19 AM
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