logo
  Join        Login             Stock Quote

Housing Starts Fell In January As Permits Increased

 February 20, 2013 02:06 PM


US housing starts dropped by a more-than-expected 8.5% last month, the Census Bureau reports. Meanwhile, newly issued building permits gained 1.8% over December's total, at a seasonally adjusted annual rate. More importantly, both series continue to advance at 20%-plus levels on a year-over-year basis. That's a strong signal for thinking that housing recovery remains intact.

The month-to-month data will, of course, tell us differently at times. As usual, however, it's best not to focus too closely on the short-term figures, which are prone to various distortions.

[Related -Initial Jobless Claims Rose Unexpectedly]

For purposes of discerning the big-picture trend for the business cycle, the annual pace is considerably more reliable for housing and other economic numbers. By that standard, today's housing construction and permit data deliver another round of upbeat news. Permits, which are included in The Capital Spectator Economic Trend and Momentum indices, enter the January column firmly in the black. As a result, last month's economic profile looks a bit brighter, and recession risk a bit lower, as far as this year's first month is concerned.

[Related -All Quiet on the Record High Front]

The revival in housing construction, in short, rolls on. That said, the 20%-plus year-over-year pace for both starts and permits is unsustainable. The gains we've seen for much of the past year are partly a function of a rebound from a low base. The recent monthly annualized rate of 800,000 to 900,000 starts a month is roughly half as much as the pre-recession level. Granted, the pre-recession level was over the top, as we now know. In any case, we're surely headed for a lower pace of growth.

But growth still looks like a reasonable forecast. One clue: permits forged higher again last month, and currently exceed starts. That's a convincing leading indicator for expecting residential construction will soon follow in the months ahead.

For the near term, something on the order of 10%-15% growth looks reasonable and sustainable. That assumption implies that we'll see more monthly decreases in 2013 in the transition from high rates of annual increases to moderate increases. Nonetheless, a housing market that's still growing at a moderate pace is a considerable plus for the economy overall. According to the National Association of Home Builders, housing's contribution to GDP ranges somewhere between one-tenth and one-fifth through time. The fact that it's contributing at all in a positive way is major shift from recent history.
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageInitial Jobless Claims Rose Unexpectedly

Claims unexpectedly rose in the latest report through last weekend to breach 300,000 for the first time read on...

article imageAll Quiet on the Record High Front

What can we glean from the media’s lack of attention to the market’s recent record read on...

article imageThe Chip Maker Short Sellers Should Be Watching

Investing in semiconductor stocks is always tricky. Industry cycles can lead to bumps in the road for the read on...

article imageChicago Fed: US Economic Growth Slowed In October

The pace of US growth slowed more than expected in October, according to this morning’s update of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.