Housing Starts Weak Despite the Headlines. The Wall Street Journal says, “Surprise Jump in Housing Starts.” Yahoo Finance says, “Housing Starts Surge Unexpectedly.” So let’s look at the data (Chart on Right): The uptick doesn’t seem to match the headlines. We’ve seen a few up months during the downward trend, so don’t get too excited. We are still overbuilt in houses, as shown by the vacancy data.
You might wonder why any housing units at all are being started. Remember that housing is local, so there may be a community without the huge excess inventory. Then examine the inventory in that community; there may be neighborhoods without an excess. There may be types of housing and price points that are not in excess. That justifies some new construction.
Economic outlook for housing: still weak all through 2009. Sorry, don’t buy the headlines.