Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.
The latest round of housing data shows residential construction has fallen again, with December housing starts dropping 4.3% below November to an annualized rate of 529,000 units. Although this decline is somewhat deeper than expected, permit extensions increased strongly by 16.7% month on month in December to an annualized rate of 635,000.
Asha Bangalore, economist of Northern Trust, commented as follows: “Is the sharp increase in housing permits extended in December the beginning of a new trend? It is premature to draw a firm conclusion. However, the December Architectural Billings Index for residential housing sends a bullish signal. The Index rose by 10.7% during December. There is a strong positive correlation between this Index (advanced five months) and housing starts, implying that housing starts could move up in the early months of 2011.”
Source: Northern Trust – Daily Global Commentary, January 19, 2011.
Housing starts down, but permits provide hope was first posted on January 20, 2011 at 9:40 am.
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