ENDING THE YEAR ON A STRONG NOTE – Housing Starts – Tuesday December 20, 2011

Housing starts edged jumped 9.3% in November to an annual pace of 685k, much better than expectations for a smaller gain to a rate of 635k. Although at their highest level since April 2010, housing starts have fluctuated within a relatively narrow range for the past three years. Housing starts are now 24.3% above their very depressed year ago level but remain a stunning 69.9% below their January 2006 peak. Gains were broad based last month. Single family housing starts gained 2.3% to an annual rate of 447k as multifamily starts surged 25.3% to a rate of 238k. New single family construction has been range bound at a subdued level over the past three years while new construction starts in the multifamily sector have been quite volatile over the same period of time, although they are trending somewhat higher overall. Housing permit issuance, often used as a proxy for future construction activity, gained 5.7% in October to a 681k annual rate suggesting that new construction may continue to rise in the near term. While beginning to improve, the outlook is still uncertain surrounding the time when a strong sustained recovery in the housing market will emerge.

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