Dec Housing Starts totaled 529k annualized, 21k below expectations led by a drop in the single family component which fell to the lowest since May ’09. Multi family starts rose. Permits were well above estimates at 635k vs the estimate of 554k. The gain again was led by multi family where permits issued rose by 68k (to highest since Nov ’08) vs a 23k rise in single family (to highest since Apr ’10). A secular decline in the home ownership rate and a fall in apartment vacancies over the past few q’s are certainly key factors in the multi family trend. With respect to single family and in the context of a still very over inventoried marketplace, we want lower starts notwithstanding the short term impact on the construction sector. A positive for construction employment is that permits are now above housing completions which implies workers can finish one project and more easily move to another.

Category: MacroNotes

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