Published: Sunday, February 21, 2010
Signs indicate U.S. housing industry recovering
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Associated Press
A construction worker works on a new home in Gilbert, Ariz., in February. Residential construction posted a better-than-expected rebound in January.
WASHINGTON — U.S. home builders were a bit more confident that the housing market is recovering, according to a monthly survey released last week by the National Association of Home Builders.
The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch.
Data released by the Commerce Department also provided some good news. Housing starts rose in January to their highest level in seven months, the agency reported. Starts rose 2.8 percent to a seasonally adjusted annual rate of 591,000, the highest level since July.
Building permits — a separate, less-volatile measure of new construction — fell 4.9 percent last month to a seasonally adjusted annual rate of 621,000. This follows a cumulative 17.8 percent gain in the prior two months.
Permits for single-family homes, considered by many analysts to be the key number in the report, rose 0.4 percent to a seasonally adjusted annual rate of 507,000.
Housing starts have now risen 21.1 percent in the past year, the largest year-over-year increase since April 2004. Building permits are up 16.9 percent in the past year, the largest year-over-year gain since May 2004.
Housing starts have stopped plunging but have yet to show a sustained uptrend. In the past, housing has led the economy out of recessions but economists do not see that happening after this severe downturn.
Competition from foreclosed homes has weighed on sales and some analysts believe that banks are holding a shadow inventory of distressed homes on their books.
However, the government has stepped in an extended the first-time home buyers' tax credit. Analysts believe this should boost housing starts as spring arrives.
“It is a matter of time before the tax credit drives starts to new highs,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in a note to clients.
At 17, the builders' sentiment index shows that about one-in-six builders think the market is good. The index has been below 50 for 46 straight months after peaking at 72 in June 2005. It bottomed at 9 a year ago.
Builders are heartened by the improvement in the jobs market, said David Crowe, chief economist for the builders.
However, “several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps,” Crowe said.
The NAHB/Wells Fargo housing market index rose two points to 17 in February after falling in December and January. The increase to the highest level since November was in line with expectations of economists surveyed by MarketWatch.
Data released by the Commerce Department also provided some good news. Housing starts rose in January to their highest level in seven months, the agency reported. Starts rose 2.8 percent to a seasonally adjusted annual rate of 591,000, the highest level since July.
Building permits — a separate, less-volatile measure of new construction — fell 4.9 percent last month to a seasonally adjusted annual rate of 621,000. This follows a cumulative 17.8 percent gain in the prior two months.
Permits for single-family homes, considered by many analysts to be the key number in the report, rose 0.4 percent to a seasonally adjusted annual rate of 507,000.
Housing starts have now risen 21.1 percent in the past year, the largest year-over-year increase since April 2004. Building permits are up 16.9 percent in the past year, the largest year-over-year gain since May 2004.
Housing starts have stopped plunging but have yet to show a sustained uptrend. In the past, housing has led the economy out of recessions but economists do not see that happening after this severe downturn.
Competition from foreclosed homes has weighed on sales and some analysts believe that banks are holding a shadow inventory of distressed homes on their books.
However, the government has stepped in an extended the first-time home buyers' tax credit. Analysts believe this should boost housing starts as spring arrives.
“It is a matter of time before the tax credit drives starts to new highs,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in a note to clients.
At 17, the builders' sentiment index shows that about one-in-six builders think the market is good. The index has been below 50 for 46 straight months after peaking at 72 in June 2005. It bottomed at 9 a year ago.
Builders are heartened by the improvement in the jobs market, said David Crowe, chief economist for the builders.
However, “several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps,” Crowe said.
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