Housing starts up

Well, at least it's a bit of good news. April 2008 housing-start figures released by the U.S. Census Bureau and Department of Housing were back over the benchmark level of one million units, on a seasonally adjusted annualized basis.

At 1.032 million units, April was the third lowest month in this latest cyclical downturn, according to Reed Construction Data. March, at 954,000 units, and December 2007, at exactly 1.000 million units, were even lower. The first four months of this year have averaged 1.039 million units annualized, which is -28.9 percent versus the first-four-month average of last year, at 1.462 million units.

Housing starts are now down nearly 60 percent from their peak in January 2006 to the present. A strong case can be made, however, that the past five months are likely to be the trough in this cycle for housing starts. All three major new home indicators have moved into alignment. Permits, starts and completions are all right around one million units. The fact that completions have finally fallen to the level of starts is quite positive. Completions-above-starts is one of the factors, along with falling sales, that causes a buildup of unsold inventories.

Employment prospects, which are so influential in terms of establishing consumer confidence, continue to be a sore spot. There were month-to-month job losses in each of this year’s first four months. However, first-quarter Gross Domestic Product (GDP) came in stronger than expected (+0.6 percent) and this may well point to better economic conditions ahead. Your comment?