We got some good news on the housing front this morning. Housing Starts rose in November to a seasonally adjusted annual rate of 685,000 from 627,000 in October, a rise of 9.3%. The number was much better than the expected level of 627,000. The October numbers were revised slightly lower from 628,000. Relative to a year ago they are up 24.2%. The question is if the higher starts are being absorbed by the market, or are simply adding to inventory. That question should be answered on December 23th when we get the New Home Sales figures. If they confirm the move in starts, consider it an early Christmas present for the economy.
However, almost all of the strength was in the very volatile multi family sector (five or more unit apartments and condos). If one looks at only single family houses, the gains were much more modest. Single family starts rose to 447,000 from 437,000 in October, a rise of 2.3%, and up 1.5% from a year ago. The volatile multi family sector, jumped by 32.2% on the month to an annual rate of 230,000. Year over year, multi-family starts are up a very robust 180.5% (no that it not a typo, but it is from a low base).
Normally Housing is the sector that leads us out of recessions, but it has not this time, and that is the principal reason the recovery has been so weak. Recently the data has been getting a bit better, but I’m not sure if it is for real, or just a false start. What is your opinion? If this is the bottom in housing, it will provide significant upside to 2012 economic growth, and that is probably the biggest “upside risk” there is right now.
