Implications: The recovery in home building is clicking on all cylinders and still has much further to go. Housing starts rose 6.9% in June to the highest levels since October 2008. Single-family starts increased 4.7% and are up 21.7% from a year ago; multi-family starts increased 12.8% in June and are up 28.5% from a year ago. Looking deeper into the report, the total number of homes under construction (started, but not yet finished) increased for the tenth straight month, the first time this has happened since back during the building boom in 2003-2004. What this means is that home builders are consistently starting more homes than they are finishing. Permits to build homes fell in June, coming in at a 755,000 annual rate. But the decline was all due to multi-family permits, which are extremely volatile from month to month. As the chart to the right shows the underlying trend in multi-family permits is still up. Single-family permits increased 0.6% in June and were up for the ninth time in the past twelve months. It looks like the second quarter of 2012 will be the fifth straight quarter where home building boosts real GDP. Based on population growth and "scrappage," housing starts should eventually rise to about 1.5 million units per year (probably by 2016), which means the recovery in home building is still very young.
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Posted on Wednesday, July 18, 2012 @ 10:49 AM
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