Housing Starts higher than expected
The level of in March was higher than expected as starts increased 1.6% to 626,000 in the month. Building permits were also stronger than expected, rising 7.5% to 685,000 in March.
BOTTOM LINE: Although the increase in housing starts was driven by the volatile multi-family sector, the level and composition of permits as well as the improvement in the NAHB’s survey of housing market conditions suggests that we may be seeing some modest improvement in the fundamentals for new housing construction. However, the first-time homebuyers’ tax credit expires (again!) at the end of this month and we will need to see data for May and June before we can put too much weight on this conjecture. Nonetheless, the data for March thus far from employment, production, retail sales, business surveys, and housing construction all support our theme that the recovery is gaining traction and the economy is springing ahead.