The Good Economic News Continues

CNBC posted an article today about housing starts in December.

The article reports:

U.S. homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.

Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Data for November was revised higher to show homebuilding rising to a pace of 1.375 million units, instead of advancing to a rate of 1.365 million units as previously reported.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.375 million units in December.

Housing starts soared 40.8% on a year-on-year basis in December. An estimated 1.290 million housing units were started in 2019, up 3.2% compared to 2018.

Building permits fell 3.9% to a rate of 1.416 million units in December after hitting their highest level in more than 12-1/2 years in November.

…Single-family homebuilding, which accounts for the largest share of the housing market, jumped 11.2% to a rate of 1.055 units in December, the highest level since June 2007. Single-family housing starts rose in the Midwest and the populous South. They, however, fell in the Northeast and West.

The increase in housing starts is an indication of a healthy economy. The fact that single-housing starts rose in the Midwest and the South and declined in the Northeast and West is a further indication that Americans are voting with their feet.

Economic Indicators In November

One America News is reporting today that U.S. homebuilding increased more than expected in November and permits for future home construction surged to a 12-1/2-year high.

The article reports:

The economy’s near-term prospects were also bolstered by other data on Tuesday showing a strong rebound in manufacturing production in November as the return of formerly striking General Motors’ <GM.N> workers boosted automobile output. The data suggested the economy remained on a moderate growth path in the fourth quarter despite slowing consumer spending.

…In a separate report on Tuesday, the Fed said manufacturing production rose 1.1% last month after dropping 0.7% in October. Excluding motor vehicles and parts, manufacturing output increased 0.3%.

The rebound in manufacturing production suggests the factory downturn is probably close to running its course. Manufacturing output is still expected to contract in the fourth quarter.

“This is a welcome shift after declines in three out of the four preceding months, but not the end of the struggles for manufacturing,” said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Single-family homebuilding, which accounts for the largest share of the housing market, increased 2.4% to a rate of 938,000 units in November, the highest level since January. Single-family housing starts rose in the West and Northeast, but fell in the Midwest and the South.

Single-family housing building permits rose 0.8% to a rate of 918,000 units in November, the highest since July 2007.

Starts for the volatile multi-family housing segment jumped 4.9% to a rate of 427,000 units last month. Permits for the construction of multi-family homes rose 2.5% to a rate of 564,000 units.

The economy is doing very well. The only thing that would make it better would be if the people we elected and sent to Washington would get serious about cutting spending and lowering our national debt.

Do Politics Influence Where People Choose To Live ?

Map of USA showing states with no state income...

Image via Wikipedia

Yahoo Finance posted an article yesterday entitled, “States Where No One Wants To Buy A New Home.” Since I live in one of the states on the list (Massachusetts is listed as number 7 of 10), I read the article.

The map above shows all the states with no state income tax in red and the states that tax only interest and dividend income in yellow. I am not sure how much of a factor this is in the number of housing starts. It is interesting, though, that none of the states with no state income tax are on the list of states with the lowest number of housing starts.

The article reports:

Surprisingly, our list of states where few permits have been issued recently is different from the typical list of the worst housing markets. California, Nevada and Florida are always on those lists because homes are vacant and home values continue to drop. But the three are not on this list. It may be that prices have dropped so low in these markets that home inventory has begun to move, even if only tentatively. Instead, markets where housing permits are very small in relation to total homes are markets in which builders have abandoned any hope of near-term sales.

In case all you really wanted to do was see the list, here it is:

  1. Rhode Island
  2. West Virginia
  3. Illinois
  4. Michigan
  5. Connecticut
  6. Ohio
  7. Massachusetts
  8. New York
  9. Maine
  10. Pennsylvania

What in the world do these states have in common? I suspect there are a lot of reasons for the number of building permits to decrease in these states. Michigan for instance has lost a lot of businesses due to the tax policies of recent state administrations. Massachusetts, Connecticut and Rhode Island all have state income taxes and business environments that do not necessarily encourage businesses to migrate there. New York is a very expensive place to live, although I believe the current governor is trying to ease the burden on the state’s taxpayers. It is interesting to me that these are all states in the northern areas of the country. Could it be that as the baby boomers age, they are simply looking for warmer places to live?

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