Permits and Housing

Via Bloomberg:

"Building permits in the U.S. unexpectedly jumped in December, signaling gains in housing will be sustained into 2010 after winter weather depressed construction at the end of last year."

Permits were up 10.9% in fact, pointing to future growth in housing starts. Also of interest,

Construction of single-family houses decreased 6.9 percent to a 456,000 rate, while permits increased 8.3 percent last month. Work on multifamily homes, such as townhouses and apartment buildings, climbed 12 percent to an annual rate of 101,000, a six-month high.

Housing starts themselves were off 6.9%. Some experts point to the unusually cold weather of late as a reason for the decline. Maybe that has some merit. . . I don't know. The big news for me is the 12 percent climb in construction of multifamily homes. In my opinion, this signals the beginning of what might be a long term transition amongst American families from residential single family homes, to apartments and townhouses. The average consumer may have figured out that he/she can't afford a free standing home and must look elsewhere for housing opportunities. If multifamily homes continue growing at this rate, it might add yet another headwind to the recovery in housing. With high unemployment and rising home inventories, builders are already weary of undertaking new projects, this adds just one more thing for them to worry about. On the other hand, the increase in permits is definitely not something to be ignored, and displays if nothing else that conditions likely won't deteriorate further, at least in the near future, which can and should be interpreted as good news.