Housing starts rebounded in February, posting an increase of 9% after they declined by 14% in January. Year-over-year, groundbreaking on new homes is down 28.5% compared with February 2006, according to the Dept. of Commerce. The seasonally adjusted annual rate for February came in at 1.525 million, up from a 10-year low of 1.399 million in January (revised). Economists' expectations were for a smaller annual rate of between just 1.45 million (Bloomberg) and 1.46 million (MarketWatch). Housing starts are considered to be fairly seasonally volatile, based on weather; starts jumped 18% and 26% in the South and West, respectively, where the weather was better, offsetting declines of 14% and 30% in the Midwest and Northeast where weather conditions were uncooperative in February. Building permits fell 2.5% - economists expected the number to be roughly unchanged. U.S. futures, which had been down prior to the housing data, recovered on the news, entering positive territory.
Sources: MarketWatch, Bloomberg
Commentary: Who's to Blame for Subprime Woes? Not the Fed. • Housing and Misuse of the Stock Market • How the Sub-Prime Mortgage Crisis Could Spread
Stocks/ETFs to watch: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), iShares Dow Jones US Home Construction (NYSEARCA:ITB)
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