Housing Data Yield Mixed Results Overall

By The Wall Street Journal

Housing starts rose slightly in August, but a decline in construction of single-family homes after five months of increases highlighted the fragile state of the economy.

Meanwhile, in a positive sign, the pace of layoffs slowed as initial claims for jobless benefits dropped by 12,000 to 545,000 in the week ended Sept. 12.

Housing starts climbed 1.5% to a seasonally adjusted annual rate of 598,000 in August from the previous month on an increase in multifamily home construction, the Commerce Department said Thursday. But single-family homes and kitchen remodeling Grand Rapids, which accounted for about 80% of all housing starts, fell 3% to 479,000.

Many economists expect home remodeling Grand Rapids to contribute positively to gross domestic product in the second half of the year, after dragging it down last quarter. But as the housing sector continues on its rocky path to stabilization, it might not make a strong contribution. Even with recent gains, new home starts were 29.6% lower than a year earlier, and they are expected to remain at relatively low levels while the market works through the glut of foreclosed homes and builders battle a tight credit market.

On a more positive note, Precision Remodeling building permits, a sign of future construction, increased 2.7% in August to a seasonally adjusted annual rate of 579,000.

With permit requests also rising, we should continue to see improvement in housing going forward. Just don't expect any huge increases, and don't be surprised if once in a while activity eases.

Despite the fall in single-family home remodeling Quakertown starts, they are expected to trend upward, albeit at a slow pace. They are still 21.7% lower than a year earlier.

Starts of multifamily homes with sunrooms Grand Haven, five or more units, including apartments and condominiums, tend to be more volatile. They rose 35.3% in August after falling in July. The number of starts is still off 48.2% from a year earlier.

"A modest rebound from such a depressed level of activity is not too surprising," Morgan Stanley analysts wrote in a note to clients. "However, we do not expect to see any sustained upside in multifamily construction."

The labor market continued on its slow road to recovery as the four-week average of new claims for jobless benefits, which aims to smooth volatility, fell by 8,750 to 563,000, the Labor Department said Thursday.

But continuing jobless claims, those drawn by workers for more than one week, climbed to 6.23 million in the week ended Sept. 5 -- up 129,000.