Housing Starts Soar To 6-Month High In January… Or Do They?
Sometimes, headlines for housing can be misleading and this week gave us a terrific example.
On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.
A “Housing Start” is a privately-owned home on which construction has started.
Headlines on the Housing Starts story included:
- U.S. Housing Starts Hit 6-Month High (Reuters)
- U.S. Economy Receives Home Building Boost (Shepparton)
- Housing Starts Post Sharp Rebound (ABC)
Based to the headlines, the housing market looks poised for rapid growth through the Spring Market.
The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units. This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.
If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009. January’s tally is slightly below the 8-month average.
Perhaps more interesting than the Housing Starts, though, is the Commerce Department’s accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.
According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.
One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s dwindling time frame. Sales are expected to spike in March and April and more homes will come online to deal with that demand. Home buyers should shop carefully, but with an eye on the clock.
As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.
Related posts:
- Housing Starts Data Hints That Housing Will Expand Even After The Tax Credit Expires
- Single-Family Housing Starts Fell In January, Despite What The Headlines May Have Told You
- Housing Starts Data Much Better Than The Headlines Would Have You Believe
Michael Haigh has 20+ years of professional experience in the banking and mortgage industry. He has the knowledge, education, and dedication to get you the best loan for your situation, answer your questions honestly and completely, and make your mortgaging experience a pleasure. His reputation includes being the number one lender in the country for CitiBank for 9 years, then at Chase for 1 year and now with WJ Bradley since August of 2009. This is because of the quantity of loans, myriad of people he's helped, and his dedication to helping his clients find the perfect loan for them.
