Thursday, January 18, 2007

New Nome Construction Increases 4.5%

From CBSMarketwatch

New construction on homes in the United States rose for the second straight month in December, reflecting year-end strength in apartment construction, the Commerce Department estimated Thursday.

Meanwhile, the number of new building permits issued rose for the first time in 11 months.

Economists said weather played a major role in the increased building activity.

The increase in housing starts was likely due to "a few large multifamily projects that were able to get started due to record warm weather," wrote Joshua Shapiro, chief economist for MFR, in an e-mail to clients.

"We do not take the data as a sign that the housing market is stabilizing, nor do we believe the worst of the housing correction is behind us," wrote Richard Moody, chief economist for Mission Residential, in an e-mail.


Starts of multifamily housing jumped 42.1% in December, reaching 412,000. This marked the biggest gain since April 2005.

On the other hand, starts of single-family homes fell 4.1%, trending to a seasonally adjusted annual rate of 1.23 million from 1.28 million in November.

The starts in multi-family projects appear to be the reason for the jump. That makes sense. Considering the following charts from the WSJ:

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Sales are trending down and inventory is up. This is not the time to be adding to inventory.