February Housing Starts

Updated 16-Mar-10 09:09 ET

About this release

Highlights

New housing starts declined 5.9% m/m in February to 575,000.
The consensus estimate called for starts to fall slightly more to 570,000.
Building permits declined from 622,000 permits to 612,000.
The consensus estimate called for permits to fall to 601,000.

Key Factors

In a somewhat surprising note, starts in January were revised up from 591,000 to 611,000. We believed, along with many economists, that home construction would wane as the fiscal and monetary stimulus programs expire by June 2010. Homes constructed after December would probably not come on-line until after the expiration date, and the new homes would be subjected to consumers who have less incentives to make a new purchase.
The strength in the home sales numbers makes us wonder if homebuilders believe the stimulus plans will be extended beyond June 2010.

Big Picture

Housing starts are at extremely low levels and the outlook is not likely to improve any time soon due to high levels of inventories of unsold new homes. An uptrend in construction will require an improvement in employment and income, and then take some time as inventories need to be reduced. Government action to boost mortgage seems to have helped, and starts have begun to stabilize.

Category	FEB	JAN	DEC	NOV	OCT
Starts	575K	611K	573K	579K	524K
1 Unit	499K	502K	481K	492K	471K
Multi Units	76K	109K	92K	87K	53K
Permits	612K	622K	653K	589K	551K

Release Details

Housing Starts and Building Permits

Importance (A-F): This release merits a B-.
Source: The Census Bureau of the Department of Commerce
Release Time: 8:30 ET around the 16th of the month (data for one month prior).
Raw Data Available At: http://www.census.gov/const/www/newresconstindex.html.

Housing Starts are a measure of the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Permits lead starts, but permits are not required in all regions of the country, and the level of permits therefore tends to be less than the level of starts over time.

The monthly national report is broken down by region: Northeast, Midwest, South, and West. Briefing recommends analyzing the regional data because they are subject to a high degree of volatility. The high volatility can be attributed to weather changes and/or natural disasters. For example, an unexpectedly high level of rain in South could delay housing starts for the region.

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