Housing starts gradually improve

Home builders have struggled in the wake of the expiration of the tax credits at the end of April, and builder confidence has been an accurate reflection of what's been going on in the market.

Activity continues to lag, but the latest data on housing starts and building permits may provide a reason for some very tentative optimism.
Housing starts in November did rise by 3.9% to a seasonally adjusted annual rate of 555,000, while single family starts were up a more impressive 6.9% to 465,000.  Building permits, which provide a peek at the future, slipped 4.0% to 430,000; however, single-family permits gained 3.0% to 416,000.



Looking at the chart above, single family starts and permits remain well below the levels associated with the tax credits, but we are seeing signs of a very gradual turnaround - at best.  More likely, the market is limping along the bottom.

Blame the high level of foreclosures and short sales, coupled with the weak job market. Concerns that prices could keep falling are also playing a role.

Still, getting the economy to create a significant number of new jobs would go a long way in helping the market to heal.  But for now that request is probably a bit unreasonable.