The thing about U.S. housing starts is that even if they stay right where they are, that will be a big plus. They have settled down just below 600,000 units on an annualized basis over the past three months. August’s figure, released today, is 598,000 units. At least they’re not falling anymore. They hit their low point in April 2009 at 479,000 units. Prior to that, they fell steadily from January 2006, lowering home prices, on-site construction-labor activity levels and individual, family and consumer confidence all at the same time.

An end to the decline in U.S. new home-building will mean no further drain on gross domestic product. Along with a pick-up in auto demand, due to “cash for clunkers”, it provides a good reason to expect third-quarter GDP change in the U.S. will be positive.  

Regionally

The regional shares of the U.S. new homes market currently stand as follows: the Northeast, 13%; Midwest, 19%; South, 47%; and West, 21%. The South is still accounting for almost half of all U.S. housing starts. It won’t be long before some of the regional monthly figures this year match what they were last year. For example, August starts in the Midwest were only -11% versus their record in August 2008. Current starts in the Northeast are as high as they were in October 2008. And starts in the South and West should reach the same annualized monthly levels as last year by November-December.

It will be interesting to learn what has happened to the unsold inventory of new single-family homes in the U.S. The figure has been dropping dramatically of late. That press release is not scheduled for another week, however, Sept. 25 to be exact. As a final observation, single-family starts are doing better than multiples at this time. The former is -39% on a year-to-date basis while the latter is -58%. Comparing individual month of August this year with August of last year, singles were -22% and multiples were -50%.

Northeast		Midwest
Jan-Aug average 2008 = 142,000 units; Jan-Aug average 2009 = 62,500 units (-56.0%). U.S. Northeast annual starts: 2007 = 142,900 units; 2008 = 121,000 units (-15.3%).		Jan-Aug average 2008 = 145,800 units; Jan-Aug average 2009 = 93,300 units (-36.0%). U.S. Midwest annual starts: 2007 = 210,100 units; 2008 = 134,900 units (-35.8%).
South		West
Jan-Aug average 2008 = 494,000 units; Jan-Aug average 2009 = 272,800 units (-44.8%). U.S. South annual starts: 2007 = 681,100 units; 2008 = 453,400 units (-33.4%).		Jan-Aug average 2008 = 219,300 units; Jan-Aug average 2009 = 120,300 units (-45.2%). U.S. West annual starts: 2007 = 320,900 units; 2008 = 196,200 units (-38.9%).