Housing starts increased 1.5% in January to 699,000 units at an annual rate
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Implications: More up-beat numbers on the housing market today.  Housing starts easily beat consensus expectations for January and were revised up for prior months as well.  Looks like the first quarter of 2012 will be the fourth straight quarter where home building boosts real GDP.  Although the gains in January were all in the volatile multi-family sector and were likely boosted by unusually mild January weather, today's figures reinforce the upward trend for home building.  Single-family starts are up 16.2% from a year-ago and the top chart to the right shows the strength in multi-family construction.  Meanwhile, permits for future construction continue to gain.  Notably, the number of single-family homes under construction increased 2.1% in January, the largest gain since 2004.  The number of single-family starts exceeded the number of completions by an annualized 119,000 in January, the widest gap since the peak of the housing boom back in early 2006.  As we wrote a few months ago, the long-awaited turning point in home building has arrived.  Based on population growth and "scrappage," home building must increase substantially over the next several years to avoid eventually running into shortages.  For more on the housing market, please see our research report (link).  In other news this morning, the Philadelphia Fed index, a measure of manufacturing activity, increased to +10.2 in February from +7.3 in January.  Once again, reports show both factories and home builders lifting economic growth.

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Posted on Thursday, February 16, 2012 @ 10:25 AM

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