Markets are responding semi-positively to the recent Commerce Department’s report that U.S. housing starts rose more than expected in January.
Driven mainly by multi-family rental property, housing starts saw a 1.5 percent increase to an annual rate of 699,000 units.
This is a highly revisable number and being a skeptic of the “housing recovery” I am still not convinced of a real trend. Slightly comforting was the fact that December’s reading was revised higher to a 689,000-unit rate.
If you look at the report in detail, it really highlights the fact that rental prices are through the roof and investors are taking advantage. The starts of multi-unit buildings, which are often rented, jumped 8.5 percent in January. New construction on buildings with five units or more increased 14.4 percent.
This all sounds good but if you look at the chart above you can see that current starts are pitiful when compared to 2006-2008. Again I question whether this negligible growth can be mostly attributed to apartment buildings and not really to new, retail buyers…
What are your thoughts?
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