Market Watch: Housing To Climb into 2011

A September Market Watch bulletin shows that housing starts increased 10.9% in August of 2010. Permits for single family homes rose 1.9%. While the report seemed to point to an upturn in the weak U.S. housing market, most economists downplayed the better-than-expected number. They pointed out that data for multi-family starts, which surged 32.2% in August, is notoriously volatile and represents just a small portion of the housing market.

New construction of single-family homes, which account for 75% of the housing market, rose a much smaller 4.3% to an annualized rate of 438,000. Although it was the first increase in four months, construction of single-family homes is still 9.1% lower compared to year ago.

“While the volatile multi-family sector was responsible for the overall level of starts in August being higher than expected, the more important single-family component remains severely depressed," noted chief economist Joshua Shapiro of MFR Inc.

Economists say the effects of the credit have largely dissipated, giving them a clearer view of the health of the housing market.

“We have found a bottom for housing activity. It’s at a pitiful level, but it should grow from here," said senior U.S. economist Ellen Beeson Zentner of Bank of Toyko-Mitsubishi.

Permits for new construction, a more accurate gauge of home building, increased 1.8% in August to an annualized rate of 569,000.\nIt’s nice to see the news is at least more positive as we head to the final quarter of 2010 and builders are remaining positive. Highland Homes looks at this as great news and is excited about 2011 as they expect housing to continue to climb.