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US housing starts rebound but may yet hit bottom
Privately-owned housing starts recovered 9% in February to a seasonally adjusted annual rate of 1.53 million units,
according to the US Commerce Department. However, housing starts were 28.5% below the pace of a year ago
and 32.7% under the peak in January 2006 (see chart). The
recovery was mainly due to a 10% increase in the single-family sector, which accounts for about 80% of the
houses built. Unusually good weather in the South and West enabled builders to begin construction of many
single-family homes while abnormal bad weather held down building activity in the Northeast and Midwest
regions. Meanwhile, building permits (down 2.5% from
January) and housing completions (down 9.4%) fell in February, indicating that the housing sector may have yet
hit the bottom. The National Association of Home Builders (NAHB) forecasts show a gradual increase in
housing starts beginning in the second quarter of this year,
but an overall 17% decline from 2006.
Lennar warns on poor home sales in spring
Lennar, the third-largest US homebuilder, provided more evidence of the sagging confidence in the housing sector
as it warned that the traditional spring selling season had failed to ignite. The Miami-based group also abandoned its
earnings guidance for the year and took additional charges against falling land values as recent economic data
suggested the recovery of the national market would take longer than many experts had predicted.
The company¡¯s caution follows a Commerce Department report showing a slowdown in national new-home sales in
January and February and worrying signs that the large inventory of unsold houses has started to climb. The poor
start to the spring selling season is concerning industry
executives. The period from Super Bowl Sunday in February through to mid-April traditionally accounts for two-thirds of US new and existing home sales.
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