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 12/18/07 For Nov 2007 | |||||||||||||||||||||||
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Highlights
Housing starts in November got back in line with housing permits, resuming a decline but not as much as expected. Housing starts in November slipped 3.7 percent, following a revised 4.2 percent partial rebound in October. November's 1.187 million unit annual rate came in just above the consensus forecast for 1.180 million units and compared to the initial October estimate of 1.229 million units.
Within starts, weakness was led by the single-family component. Single-family starts fell 5.4 percent in November, following a 6.6 percent decline the month before. Multifamily construction is holding up surprisingly well. The multi-family component advanced 0.6 percent in November, even though this component had surged a monthly 45.9 percent in October.
On a year-on-year basis, overall starts were down 24.2 percent in November, compared to down 16.2 percent in October.
Regionally, in November declines were led by a 16.3 percent fall in the Northeast. Starts also declined in the West and Midwest, slipping 6.9 percent and 1.5 percent, respectively. Starts were up a modest 0.3 percent in the South.
Overall permits declined 1.5 percent, following a 7.2 percent drop in October. Within housing permits, single-family permits fell 5.6 percent while multifamily permits rose 7.5 percent. On a year-on-year basis, overall permits were down 24.6 percent in November, compared to down 25.0 percent in November.
The November housing starts report still shows housing construction on a decline even though there are a few signs of improvement in mortgage applications and pending home sales. These indicators are still too far upstream in the construction process to outweigh the impact of record high inventories of unsold homes. But for today, the news is about as expected and markets will be focusing on company news and on trying to figure out the impact of the Fed's new tool for improving credit market liquidity - the TAF which had its first auction yesterday but with results coming out tomorrow.
Housing starts in October made a partial rebound but permits continued to spiral downward. Housing starts in October rose 3.0 percent, following a revised 11.4 percent drop in September. October's 1.229 million unit annual rate was down 16.4 percent on a year-on-year basis. However, overall permits fell 6.6 percent, following a 4.6 percent decline the month before. The decline in permits more likely represents the true status of housing in October. With continued high supply of unsold new and existing homes and with continued weakness in prices, there is little reason for builders to boost starts.
Housing starts Consensus Forecast for November 07: 1.180 million-unit rate
Range: 1.130 million to 1.210 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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