Housing Starts Up 23.6% from Previous Year

21 02 2013

National Association of Realtors’ Research Staff recently released economic indicators and market report showing an increase in housing starts in the report and its significant impact on the housing supply and job creation for the local economy.

  • In a mild disappointment, Census reported 890,000 starts in December, an increase of 23.6% from a year earlier, but an 8.5% decline from an upwardly revised December figure.
  • Starts are important as construction is highly correlated with job creation and directly impacts housing supply.
  • Single family construction, which has lagged for several years in the wake of the subprime crisis and subsequent bloat in inventory, managed to defy the headline decline in starts with a modest 0.8% increase from December figure and is 20% higher than a year ago.
  • Permits for construction of single family units rose 1.9% from December to January and are 29.2% higher than a year earlier.
  • While housing starts are strong, they remain well below the historic average and should not pose a threat to inventories as much of the building is done in niche markets and inventories have fallen sharply in recent quarters.  Builder and lender confidence in local conditions is a positive indicator for inventories, sales volumes, and price trends in these markets.
  • Furthermore, new construction and the economic multiplier that it generates will help to spur further job creation and income growth.

Source: Economic Updates, by Ken Fears, Manager, Regional Economics – National Association of Realtors

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