Still doubting the housing market recovery?…Total new housing starts in the month of February were a very strong 35% higher than year-ago levels, according to this morning’s report from the Commerce Department. While some of the recent improvement in construction activity is likely due to this year’s much warmer than normal temperatures across much of the country, gains in new housing construction have been relatively consistent and gaining strength for several months now. The gains also coincide with improvements in actual new home sales.
A dynamic within the housing sector that we believe has largely been overlooked is that builders are ramping-up the building of single family homes just to match demand (single family starts were 18% higher yr/yr in Feb.). New home inventories have been steadily declining over the last several years; in other words, despite the absolutely dismal pace of new home sales over this period, builders have actually been under-producing demand and now must increase activity just to meet this low level of demand!
Even though starts were down from January, BUILDING PERMITS ARE UP—according to NAHB Economist David Crowe.