Tuesday, March 17, 2009

A Glimmer Of Hope

The Lehmann Letter ®

Today the Census Bureau announced a big jump in February housing starts: http://www.census.gov/const/newresconst.pdf

The Bureau said:

“Privately-owned housing starts in February were at a seasonally adjusted annual rate of 583,000. This is 22.2 percent (±13.8%) above the revised January estimate of 477,000, but is 47.3 percent (±5.3%) below the revised February 2008 rate of 1,107,000.

“Single-family housing starts in February were at a rate of 357,000; this is 1.1 percent (±11.0%)* above the January figure of 353,000. The February rate for units in buildings with five units or more was 212,000.”

A 22.2 percent increase is great news. But the second paragraph provides important detail, together with the data available in the site referred to above.

Single-family-home starts barely improved. Apartment-house construction accounts for virtually all of the gain. Single-family starts edged up from 353,000 to 357,000. Apartment starts jumped from 118,000 to 212,000.

All of this activity helps the economy and is welcome news. But the housing crisis has arisen in single-family homes, and the continued weakness in single-family starts reflects this. Perhaps apartment-house construction jumped because builders expect a surge in apartment dwelling generated by the single-family home foreclosures.

Housing Starts

(Click on chart to enlarge)

(Recessions shaded)

In any event, as the chart makes clear, even 583,000 starts remains below the trough of earlier recessions.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2009 Michael B. Lehmann

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