Housing Starts Miss As Permits Jump Ahead Of Building Code Changes
More weak economic data today, as Housing starts were reported at 529K on expectations of 550K, another sequential decline from the prior revised 553K. The silver lining was in the housing permit number which was 635K on expectations of 554K (compared to a prior revised 544K). Yet as the note from GS below explains the only reason for the surge in permits is due to a jump in applications ahead of the implementation of new building codes in 2011. As Hatzius notes: "If building code changes are the main explanation for the rise in
permits, we should see a substantial drop back in multifamily permits
1. Housing starts slipped 4.3% overall in December, with the drop entirely accounted for by higher-value single-family starts (which were down 9% on the month). Multifamily starts were up 18%, although they remain at exceptionally low levels.
2. Permits rose sharply, probably due to a rush by builders to apply for approval before new building codes came into force in 2011. Multifamily permits rose 53% on the month, while single-family permits were up 5.5%. If building code changes are the main explanation for the rise in permits, we should see a substantial drop back in multifamily permits next month.
- advertisements -