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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Monday, May 19, 2008

Housing Starts Up 8.2%? - Behind the Headlines

We would not ordinarily write here about housing starts until all the April, 2008 numbers are in, sometime in the latter part of next week. However, we wanted to go behind the headlines for our readers as some confusion about this report has already been heard in our neighborhood.

Google the news on the most recent housing starts, scan the headlines, and one might assume some optimism at last. Here's a quick review that provides the background.

We do wish this was cause for optimism, finally, but it's not, and the importance of delivering context on our blog means we look a little deeper.

The Background of it All
Single family permits, starts, and completions unfortunately remain down from a year ago by 40.07%, 42.23%, and 37.63% respectively. Then why the rosy headlines?

From Business Week
:
Let me quickly dispel any notion that the 8.2% surge in housing starts in April reported by the Commerce Department on May 16 was a positive sign for real estate, or that it has much significance at all.

The rise was fueled by a 40.5% leap in construction starts on multifamily homes of five or more units – a monthly statistic that is notoriously volatile (April’s increase followed a 35% decrease in March and a 24% increase in February).
Interest Rate Roundup, a moderate voice, shows just how wildly the multi family sector can swing, with seven months of data there.

From Matrix:
“The headline increase in starts means nothing; it is all due to a rebound in the hugely volatile, but essentially trendless, multi-family sector,” said Ian Shepherdson of High Frequency Economics.
Here is the PDF from The Census Department for those who wish.

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