Housing Starts Match Expectations; Can They Build on That?
NEW YORK (TheStreet) -- The housing numbers out Tuesday were good by they need to get better.
The Census Bureau reported builders broke ground on new homes and apartments at a seasonally adjusted annual rate of 907,000 -- a pace that, if sustained, would be a small dip from last year. It matched the consensus forecast of about 910,00, and it's not so far above the 925,000 homes that builders started for all of 2013.
The more important number may be that builders took out building permits at a 1.018 million annual clip, pointing to a pretty brisk pickup in activity as the weather improves. The report means builders (and home buyers) need to raise their game in the spring to keep the recovery moving forward.
It's little exaggeration at this point to say the recovery depends critically on housing.
Manufacturing output passed its pre-recession peaks months ago, and is moving forward smartly, as Monday's better-than-expected industrial production numbers verify. Car sales are likely to get back about 16 million a year this year after a winter dip, according to the Credit Union National Association, whose members are laser-focused on making car loans.
The big gap is housing. In 2005, there were nearly 2.1 million housing units started. That fell to 554,000 by 2009. The economy is still about 1.2 million jobs short of pre-recession levels in housing and related remodeling trades. That is enough to account for all of the economy's 650,000-job shortfall compared to the 2007 peak -- if housing were back to normal, private-sector employment would be more than a million jobs ahead of 2007.
Getting jobs back to normal -- say, unemployment in the mid-5% range -- is predicated on getting housing, at least, to a new normal. Forecasts for this year vary widely, from about 1.04 million at Mesirow Financial to 1.35 million at Moody's Analytics. While Tuesday's report is better than a sharp stick in the eye, it's decidedly toward the low end of forecasts that I've seen lately.