Housing Starts Spring Forward

Happy St. Patrick’s Day Alameda: With Spring approaching this weekend there was a glimmer of Hope Springing Eternal as a surprising report on housing construction showed the first increase in eight months this morning.

The Commerce Department reported housing starts jumped 22% in February to a seasonally adjusted annual rate of 583,000 from a revised 477,000 for January. It was the biggest percentage gain in 19 years, a far difference from what the economists had expected starts of 450,000 last month.

The small upward movement still does not change the fact that the month-over-month increase, housing starts were down more than 47% from February 2008, when more than 1.1 million new homes broke ground. Construction of single-family homes rose 1.1% last month to an annual rate of 357,000, and new construction of buildings with five or more units surged 80% to 212,000.

Building permits rose 3% in February, according to the Commerce Department report, to an annual rate of 547,000. Building permits are considered a reliable indicator of future activity in construction.

There is still a huge glut of houses on the market, some homebuilders are trying to entice consumers with special financing deals, vacations, job-loss insurance, cars and list goes on.

For Alameda, since new housing is very limited, the numbers are just an indicator of the overall status of the market. In recent months inventory in Alameda has continued to grow at very small rate of increase, but sales have remained stagnant. For us on the Island a better indicator will be sold units, as this increases our insolated market will halt its gradual decline, level and begin to climb again.

So, I will keep watching the inventory and sales to see what spring brings our community.