Implications: Don't get bent out of shape about housing starts plummeting in February. Instead, take a moment to review the data for the month. Retail sales were weak, except for buying over the internet and by mail-order. Utilities soared at the fastest pace in more than 40 years, while manufacturing production fell. And now housing starts plummeted at the second fastest pace in the last twenty years. If it wasn't obvious already, it should be now: the coldest February temperatures for the most people since 1979 had a huge (but temporary) effect on the economy. In fact, Americans in 23 states experienced a "top-10-coldest February" going all the way back to 1895! But, like last year, we expect a big bounce in growth in the months ahead. Housing starts fell 17% in February, the largest drop in four years. The Northeast had its second slowest pace of housing starts on record, going back to 1959. When it's this cold and snowy it's nearly impossible to break ground. However, in spite of the drop in starts, there are still signs the trend in home building is upward. The total number of homes under construction, (started, but not yet finished) increased 0.4% in February and are up 17.1% versus a year ago. Permits for future building rose 3% in February and are up 7.7% from a year ago, boding well for future gains in housing starts. Based on population growth and "scrappage," housing starts should rise to about 1.5 million units per year over the next couple of years, so a great deal of the recovery in home building is still ahead of us. In other recent housing news, the NAHB index, which measures confidence among home builders, declined to 53 in March from 55 in February. Readings greater than 50 mean more respondents said conditions were good than bad. Expect more Plow Horse-like gains in housing in the year ahead.
Click here for PDF version
|
|
Posted on Tuesday, March 17, 2015 @ 10:19 AM
|