U.S Housing Starts Surprises to the Upside
Housing starts came in at 10.5 per cent, according to the U.S. Department of Commerce, its highest level since April.
“Today’s data on housing activity is welcome positive news,” U.S. Commerce Secretary Gary Locke said. “We’re headed in the right direction, but we know that the housing market is tied directly to jobs and incomes.”
The S&P Homebuilders ETF (XHB) rose 1.6% in afternoon trading.
"Overall, I would have to rate this report as being a big positive for the economy, at least in the short run. Residential investment, the largest part of which is new home construction, is normally what pulls economies out of recessions," writes Dirk van Dijk, reporting for the Wall Street Pit.
"Given that the Great Recession was caused by the mother of all housing meltdowns, and the big overhang that housing still represents for the country, the fact that we got out of the recession at all starting in June 2009 is sort of remarkable. It is very hard to pull a train forward when its biggest locomotive is derailed.
Now, perhaps — just perhaps — that locomotive is back on the tracks. If so, that is very good news for the economy. Just how big a problem the additional supply will be for the overall housing market will be, in part, answered on Friday when the new home sales figures come out. If new houses are being bought, then this is good news, if they are just sitting in inventory, well then, 'Houston, we have a problem.'"