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 1/17/08 For Dec 2007 | |||||||||||||||||||||||
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Highlights
Housing starts in December fell sharply, indicating that housing may be worse than even most believed. Housing starts in December dropped 14.2 percent, following a revised 7.9 percent decline in November. December's 1.006 million unit annual rate was dramatically below the consensus forecast for 1.14 million units and compared to the initial November estimate of 1.187 million units. Overall permits fell 8.1 percent, following a 0.7 percent dip in November. The latest housing starts report indicates that housing has a long way to go for recovery. However, the market players will be scratching their heads as initial jobless claims also fell sharply today. Most will be on the sidelines until Fed Chairman Bernanke speaks at mid-morning today.
Within starts, weakness in the latest month was led by multifamily units. Single-family starts in December declined 2.9 percent after a 6.9 percent fall in November while multifamily starts posted a sharp 40.3 percent drop after a 10.1 percent decline in November.
Regionally, in December declines were led by a 30.8 percent fall in the Midwest, with declines also seen in other regions. Starts in the Northeast were down 25.8 percent; the South, down 3.3 percent; and the West, down 19.6 percent.
Overall permits declined 8.1 percent, following a 0.7 percent drop in November. Within housing permits, single-family permits fell 10.1 percent while multifamily permits decreased 4.1 percent.
On a year-on-year basis, overall starts were down 38.2 percent in December while permits were down 34.4 percent.
The December housing starts report shows housing as notably weaker than most realized. The only glimmer of hope is that weakness was in the multifamily component and may have been affected by severe weather. Nonetheless, housing is more of a drain on the economy than most have believed. The numbers will not bode well for homebuilders. Fed Chairman Bernanke is speaking later this morning and markets are likely to quietly sort out the countervailing trends of a drop in housing starts and a drop in initial jobless claims this morning.
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 puts starts down 24.2 percent on a year-on-year basis. With supply for both existing and new homes still near record levels, we could still see another decline in starts.
Housing starts Consensus Forecast for December 07: 1.14 million-unit rate
Range: 1.08 million to 1.18 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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