Housing Starts Up, But Look Behind the Numbers

Posted by: Chris Palmeri on September 17, 2009

The housing news continues to be mixed. The Commerce Dept. released its monthly numbers on new housing starts, showing an increase of 1.5% to 598,000 units, the highest level in nine months. Builder KB Home announced it was re-entering the Mid-Atlantic region, which it had left in 2007.

Peel behind the numbers, however. Single-family homes, which make up 85% of the starts, actually fell, the first decline since January. It was only the big jump in multi-family construction that allowed the overall number to rise.

Meanwhile, yesterday, the Mortgage Bankers Association reported that’s its index of loan applications fell 8.6% for the week ending Sept. 11. That number is seasonally adjusted for the normally expected slow down in back to school season. On an unadjusted level, applications fell 18%.

Perhaps that’s why shares of homebuilders fell on today’s “good” news. “The claim that housing is out of the woods is greatly exaggerated,” said Jeffrey Gundlach, the chief investment office of money management firm TCW recently.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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