Economic Notes: Housing Crawls Out of the Cellar
1/25/2010
By Patrick O'Keefe, Director of Economic Research, J.H. Cohn
Homebuilding continued to crawl out of the cellar in December with national activity surpassing the year-ago level for the first time since March 2006.
Homebuilders started construction on slightly more units in December than in the same month a year ago, ending a string of 44 consecutive year-on-year declines.
Unusually poor weather in December contributed to a slight decline (4%) in housing starts from November’s upwardly revised level. This continued a year-long seesaw pattern of monthly increases and decreases.
Compared to April’s cyclic low, housing starts nationally were up 16.3% in December.
December’s building permits (i.e., authorizations to begin construction) significantly exceeded (+15.8%) the year-ago level. This also ended a 44-month string of year-on-year declines.
Looking at the year as a whole, 2009 saw the fewest number of starts and permits since 1959, when current recordkeeping began.
However, the increase in permits suggests that housing construction is poised to accelerate gradually as the weather improves in 2010.
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