Housing starts measure initial construction of residential units (single-family and multi-family) each month. A rising (falling) trend points to gains (declines) in demand for furniture, home furnishings and appliances. Why Investors Care
| Released on 3/18/08 For Feb 2008 | |||||||||||||||||||||||
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Highlights
Housing starts in were a little stronger than expected in February, largely due to upward revisions to January data. Meanwhile, housing permits point to further weakening in housing. Starts fell back 0.6 percent to a 1.065 million unit annual rate, following a 7.1 percent surge in January. February's pace topped market expectations for 0.99 million units and left starts down 28.4 percent on a year-on-year rate. January starts were revised up to 1.071 million units from 1.012 million units for the initial estimate. However, permits came in much weaker. While, starts can be affected by how seasonally typical the weather is, permits are less immune to vagaries in the weather. Building permits dropped 7.8 percent to a 0.978 million unit pace after declining 1.8 percent the month before, leaving the year-on-year rate a down 36.5 percent.
Within starts, weakness in the latest month was led by the single-family component which dropped 6.7 percent to an annualized 0.707 million unit pace. In contrast, multifamily starts rebounded 14.4 percent to a 0.299 million unit pace. Regionally, overall starts showed gains in the West and South while the Northeast declined and the Midwest was flat. Permits showed sharp decreases in the Midwest and Northeast and a moderate decline in the South. Only the West posted a gain in permits for February.
The latest starts report looks a little favorable based on the headline numbers but the permits data indicate the housing is still sliding with the bottom not yet in sight. The permit data give the Fed room to ease but today's strong core PPI figure will force the Fed to debate the inflation problem further before announcing their rate decision at 2:15 p.m. ET today.
Housing starts paused in its downward spiral with a modest 0.8 percent rise in January. Still, the latest number for a 1.012 million unit pace is still badly depressed and is down 28 percent on a year-on-year basis. Given the continued high levels of unsold new and existing homes, starts are likely to resume their downtrend in February.
Housing starts Consensus Forecast for February 08: 0.99 million-unit rate
Range: 0.96 million to 1.02 million-unit rate
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Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes six months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a six month moving average. |
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