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FXstreet.com (Barcelona) - The housing sector continued to be a shining light in the economy towards the end of 2012. While the level of construction activity remains low, there is no doubt it is on a strong upwards trajectory. Private new-residential construction rose by 1.2% mom in November. While starts declined by 3.0% in the same month, this was after growth of 22% over three previous months and with permits - a leading indicator of activity - resuming growth in November it is likely to be only a short-run correction.

According to the NAB Analyst Team, "The stock of homes available for sale remains low and, combined with rising sales, this will support further new construction and maintain the upwards pressure on existing home prices."

"A key underlying driver for the housing market is household formation as household formation slowed markedly ahead of the recession and remained low subsequently. However, over 2012 (data available to September) the annual growth rate has started to pick-up. "This likely reflects the continuing recovery in the labor market, which may encourage more people (and provide the means) to start their own household. Indeed, there is likely an element of pent-up demand in this regard, as those forced to return to their parents homes or share with others due to the recession, will ultimately move-out causing a period of above normal household growth at some point. As a result the strong growth in residential housing investment is likely to continue." the team adds.

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