Housing Starts and Sales: Parting Ways?

The graph at left shows starts and sales of single-family housing in the United States, as well as a three-month moving average in the ratio of starts to sales. Between early 2006 and (especially) the latter months of 2008, starts and sales meandered toward convergence (i.e., a starts/sales ratio of 1.0). Since the beginning of 2009 (particularly the second half of the year), though, the two metrics have diverged once again; starts have been trending higher while sales have slumped.

Does this portend another die-back in housing starts? Find out our opinion in the upcoming April issue of Economic Outlook, available from Forest2Market.

Macro Pulse March 2010 -- U.S. Economic Recovery: Pig in a Poke or the Real Thing?

Executive Summary

The latest estimate of annualized 4Q2009 growth in real gross domestic product (GDP) was upwardly revised to 5.9 percent in February. Activity since then, however, suggests that real GDP growth in 1Q2010 will be 3.4 percent – still respectable but weaker than the previous quarter. That expectation derives from observations of tepid domestic demand thanks to continuing job losses. Although many manufacturing and service industries are enjoying a resurgence, the housing sector appears likely to continue exerting a drag on the economy. Recent dollar strength does not appear to have yet dented U.S. exports, but domestic producers’ need to expand export markets could be frustrated if the current situation is maintained for much longer. A pause in crude oil’s upward price trend is giving the U.S. economy some breathing room, but more stringent environmental regulation and heightened domestic and foreign consumption are likely to push prices higher.

Click here to read all of March 2010 Macro Pulse.

Further details on ordering our monthly 24-month Economic Outlook can be found at Forest2Market here.

Macro Pulse February 2010

Executive Summary
A slowdown in the rate of inventory de-stocking boosted 4Q2009 U.S. GDP growth to a six-year high of 5.7 percent. Export and/or domestic demand will need to be more tangible if growth is to be maintained or expanded; but eliciting greater demand for U.S.-made goods could prove challenging given the dollar’s recent strength because of concerns over Europe’s sovereign debt problems, and expectations of continued high domestic unemployment. Most December indicators of housing market activity shriveled with the expiration of the initial federal home-buyer tax credit at the end of November. However, the upward trend in permits suggests the worst of the residential construction bloodletting may have already occurred. Rising interest rates will test the mettle, and ultimately dampen the magnitude, of the housing rebound over the next 24 months. When combined with a more burdensome tax structure in 2011, rising interest rates will return the U.S. economy to recession in 2Q2011.

Click Here to read all of February 2010 Macro Pulse.

Further details on ordering our monthly 24-month macroeconomic forecast can be found at Forest2Market Here.