Housing Starts Improves, But Under Suspicious Conditions

[DailyFx]

The United State's worst housing slump in over a quarter century is showing uneven signs of life. Looking a little deeper into the details of today's data though, the sector's recession seems well in place. The Commerce Department reported new construction on residential projects grew 9.1 percent to a 1.066 million unit pace last month - much better than the slight decline forecasted. On similar grounds, permits to start new construction jumped 11.6 percent, though figure too was skewed. Looking into the details of the report, there was a notable jump in one region - the Northeast. A 102.6 percent jump in construction activity was largely the result of a change to the building code in New York. In fact, this figure was so influencial, that had it been excluded, starts would have actually fell 4 percent. What's more, construction on single family homes was at a concerning 17 year low. Looking at the other regional statistics, activity in the Midwest dropped 10.5 percent, the West throttled back 8.2 percent, while the South marked a sparse 0.4 percent improvement. Such statistics confirm the US housing market has yet to find its bottom. Until consumer are confident enough in their finances to compensate for rising mortgage rates and falling home values, the glut of inventory on the market will keep construction activity depressed. - John Kicklighter, Currency Analyst for DailyFX.com