Construction of new homes fell in January but the number of permits taken out climbed to a four and a half year high, indicating that the trend in the sector remains positive.
Housing starts dropped 8.5% to an 890,000 annualized rate from December’s revised 973,000 pace, which had been the fastest rate of building since June 2008. New permits rose to 925,000 annually from December's 909,000 also the highest since June 2008. Starts are 23.6% higher than a year ago and 86% higher than the 478,000 low in April 2009. Permits are 35.2% higher on the year and 80% ahead of the April 2009 bottom of 513,000.
Despite great improvement from the financial crash induced nadir in early 2009, both starts and permits remain far below the average of the past generation and the industry as a whole has been unable to provide anything more than limited employment and economic support to the economy.
Over the past thirty years the U.S economy has created an average of 1.418 million homes each month at an annualized rate.
Housing starts in January at 890,000 were 37% below their thirty year historical average and 38% below the monthly average during the decade from February 1983 to February 1992 of 1.431 million.
Over the past 30 years the US population has increased 30% from the 243 million average of that decade to the current figure of 315 million. Adjusting for the population growth of the past generation housing starts would have to more than double to 1.86 million annually to equal the rate of construction and economic activity of the 1980s and early 1990s.
Chief Market Strategist