According to economists responding to the latest National Association of Business Economics survey, which managed to find some bright spots concerning next year’s economic outlook, housing starts are expected to increase 10% in 2012.
Economists surveyed expect housing starts to reach 600,000 units in 2011, just slightly above the 2010 total.
The nation’s gross domestic product is expected to grow at a modest 2.5% in the final quarter of this year and by 2.4% in 2012, according to the survey.
Respondents expect the odds of a recession to be low, but said consumer spending will remain muted at about 2.1% growth in 2012, well below the historic norm of 2.8%.
Unemployment is expected to decline only marginally, with accommodative monetary policy remaining. Monthly job gains are expected to rise steadily over the forecast horizon, from an average of 100,000 during the fourth quarter of 2011 to 130,000 by the end of next year. The jobless rate will decline from 9.1% to 8.7% in 2012.
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 629,000. This is 14.6 percent (±10 9%) above the revised May estimate of 549,000 and is 16.7 percent (±11.8%) above the June 2010 rate of 539,000.
Single-family housing starts in June were at a rate of 453,000; this is 9.4 percent (±11.1%)* above the revised May figure of 414,000. The June rate for units in buildings with five units or more was 170,000.
This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for over two years – with slight ups and downs due to the home buyer tax credit.
This was above expectations of 575 thousand starts in June. Multi-family starts are increasing in 2011 – although from a very low level. This is one of the bright spots for construction and the economy this year.
Housing starts fell 22.5% in February, well below most analysts’ estimates and to the lowest rate in almost two years, according to Commerce Department data.
In a joint release, the Census Bureau and Department of Housing and Urban Development said starts fell to a seasonally adjusted rate of 479,000 units, down from a revised 618,000 for January and 20.8% lower than a year earlier.
The monthly drop was the largest since March 1984. February’s decrease comes on the heels of a 14.6% increase in starts for the first month of 2011.
Analysts polled by Econoday were expecting housing starts to come in at 560,000 with a range of estimates between 540,000 and 590,000. Economists surveyed by MarketWatch projected starts to come in at 570,000 for February. Single-family starts fell 11.8% in February to 375,000 from a revised 425,000 for January.
Permits for new homes in February declined 8.2% to 517,000 from a revised 563,000 for January and remain 20.5% below the year earlier estimate of 650,000.
This low level of starts is actually good news for housing, and we expect to see starts stay low until more of the excess inventory of existing homes is absorbed.