Tuesday, April 19, 2011

Housing Starts: Uptick or Trend?

The Lehmann Letter (SM)

CNN issued an encouraging report on housing starts this morning:


It's true that March starts at 549,000, and building permits of 594,000, are up sharply from February.

But you should take a look at the full Census Bureau report to gain perspective:


If you examine monthly data over the past two years you will see that housing starts have fluctuated around 600,000: Sometimes more, sometimes less. The chart confirms this.

Housing Starts

(Click on chart to enlarge.)

Recessions shaded

We need an upward trend, and we don't have it yet. Optimistic reports, such as this morning's CNN piece, draw attention to the occasional spikes. Pessimistic reports focus on the plunges. The trend: Flat.

It's too soon to paint a happy face on the building data. And, as this letter has said before, the economy can't recover fully without a strong revival in homebuilding.

(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.)

© 2011 Michael B. Lehmann

1 comment:

ivy said...

Housing starts have fluctuated recently. I think the good predictor is not the affordability for houses, but the consumers(the house buyers), we have more than 10% unemployment in California and roughly 9.2% unemployment in U.S., we hardly expect that the housing market will recovery sharply. And if the mortgage rates go up, it will be more difficult to push people to buy the house which will restrict the house market recover. From this month’s data, recovery is not optimistic; it’s not yet in sight.