January Housing Starts Beat Forecasts
An unusually mild January helped builders beat forecasts for housing starts, which were up 1.5 percent from December to an annual rate of 699,000, according to a Commerce Department report on Thursday, while applications for building permits increased to a 676,000 annual rate.
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“The numbers are genuinely getting better,” said Brian Jones, senior U.S. economist at Societe Generale, who had forecast a rate of 700,000 starts. “[Multifamily home construction] has a ways to run. We should be seeing a pop in single-family starts by late spring.” Construction on single-family homes decreased to a rate of 508,000 in January.
January’s annual rate of housing starts was up compared to the last few years. In 2011, construction began on 609,200 homes, while 2010 saw 587,000 housing starts. The series low was in 2009 with 554,000 starts, the lowest since record keeping began in 1959.
Starts last month were higher in the South and the West. Starts in the South rose 18 percent to a 388,000 annual rate, while starts in the West rose 12 percent. The Midwest reported a 41 percent decline, of which the majority were single-family homes, though seasonally inclement weather is at least partly to blame for lower numbers in northern states during the winter months.
Beazer Homes USA, Inc. (NYSE:BZH) saw orders jump by 36 percent during the fourth quarter of 2011 from the same period in 2010, and closings on new houses were up 60 percent. However, builders are still contending with a glut of foreclosures, which are keeping prices down. Until prices bottom out, whenever and wherever that may be, they are unlikely to turn around, and in the meantime builders will still struggle with appraisals that are close to or below construction costs.
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