The trend is still the business cycle's friend when it comes to residential construction activity. Housing starts rebounded modestly in February, rising 0.8% to 917,000 on a seasonally adjusted annual basis, the Census Bureau reports. The slight gain follows January’s hefty 7.3% decline. In contrast to the volatility of the monthly data, the year-over-year comparison for starts remains strong, as today’s update shows. A similar story applies to newly issued housing permits, which suggests that residential construction activity will continue to advance in the spring.
Even on a monthly basis, the positive trend is clear. Both starts and permits continue to rise. This is what a housing recovery looks like. Starts are below the post-recession peak set in December 2012, but not by much. Meanwhile, permits reached a new post-recession high in today’s February release, touching a seasonally adjusted annual rate of 946,000 last month.
The annual comparisons look even better. As the next chart shows, both indicators continue to post strong annual increases that are well in excess of 20% vs. year-earlier levels. The persistence of strong gains is a persuasive sign that the rebound in housing is robust.
Today’s housing construction report adds another positive spin to the February economic profile. As I noted yesterday, the macro trend overall still looks solid, and today’s housing update only strengthens this view. The data for March is still mostly a guessing game, but the February profile is nearly complete and the numbers so far still look encouraging.