Housing Starts Surprise… But Don’t Get Too Excited

September Housing Starts were 658,000 units at annual rates, up 15% from the revised August figure of 418,000 and 10.2% higher than September 2010’s rate of 597,000.  On top of those numbers, the report beat most economists’ expectations by about 10%.  As encouraging as all this sounds, most of the gains were in apartments which rose 53% from the previous month while single family homes gained less than 2% on the month.  Regionally the South and West lead the gains, followed by the Northeast with the Midwest the weakest region.   The big picture for starts hasn’t really changed — steady gains from 2000 to 2007with a peak above 2 million units followed by a slide until 2009. Since early 2009 starts are essentially flat — averaging 585,000 with a maximum of 687,000 and a minimum of 518,000 (totals include apartments, single and 2-4 unit homes).  This leaves us roughly the same place we’ve been since early 2009 — wondering when we will run out of homes since we’re not building very many.

Today’s New York Times  highlights consumer gloom and doom and points to home prices that have pushed their mortgages under water as a key cause.  This is a reminder that housing starts are only a small part of the puzzle, a much bigger question is the continuing over-hang of debt that is limiting further borrowing, lending and economic growth. The data the Times offers confirms that the Sun Belt and the Detroit area remain some of the hardest hit spots around the country, as we’ve seen in the S&P/Case-Shiller Home Price data for a long time.

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