The Census Bureau released data on housing starts for October that left many news reporters confused. The problem is that the two main measures went in opposite directions. Housing starts increased by a modest 3 percent from September levels, led by a 46.5 percent jump in starts in apartment buildings. However, authorizations fell by 6.6 percent continuing their long downward path. A quick look at the regional breakdown would eliminates the seeming mystery. Starts in the Northeast rose by 8.5 percent, while starts in the Midwest surged by 21.1 percent. Starts in the South fell by 4.6 percent. The West saw a 5.6 percent increase in starts, which was not enough to reverse an 11 percent drop in September. The story here is that better than usual weather in the Northeast and Midwest allowed for starts to move more smoothly than might ordinarily have been the case. The drop in permits, which are less affected by weather, gives the better picture of the housing market. btw, the falloffs in starts is striking. The rate for October is down by 40.6 percent from the year-round level in 2005. Starts of single family units are down 48.5 percent from the 2005 level. In the South, starts on single family units are down 51.3 percent and in the West 54.0 percent. And it ain't over yet.
--Dean Baker
