The Census Bureau reported yesterday that December housing starts fell month-to-month by 4.0% to 557,000. The November number was revised (along with a downside revision to October) to show a 10.7% monthly gain, after initially having been reported up by 8.9%. Comparisons are easy as December 2008 starts collapsed by 15.1%, while the year-to-year change was up by 0.2% in December. The December year-over-year number is evidence that even with the government stimulus measures the housing market has found a temporary bottom.
As you can see from the chart below, since December 2008, housing starts are bottoming at a very low level. For all of 2009, housing starts averaged 551,750, again confirming that housing starts are bottoming at a very low historical rate.
The “bottoming process” for housing is shown in the chart below, but the return to growth is less certain and the number of “starts” is significantly below historical trends. For all of 2009, housing starts remain 64% below the level of the past decade. Given the current job market and the fact that the Obama Administration’s housing stimulus program will end in June 2009, a significant improvement in housing starts seems unlikely.
Howard Penney
Managing Director
