US housing starts in February were at a seasonally adjusted rate of 1,855,000 4.0 per cent below the revised estimate for January 2004 of 1,932,000, but 13.1 per cent above the February 2003 estimate of 1,640,000. Permits were at a seasonally adjusted rate of 1,903,000, 1.5 per cent below the revised January 2004 rate of 1,932,000 but 6.6 per cent above the February 2003 estimate. On a regional basis it was weakness in the major South (-10.6 per cent) and West (-7.5 per cent) markets which led to the drop off in starts. Looking back, 2003 was a bumper year for US housebuilders, however it will be difficult to achieve similar growth in 2004 as these early numbers show. Instead Deutsche Bank analysts expect the market to remain at this strong level and for the number of housing starts to be roughly flat on 2003. Source: US Census Bureau
At the same time, new home sales in January fell by 1.7 per cent to a seasonally annual adjusted rate of 1.106 million from a revised December reading of 1.125 million, but were still 9.6 per cent above the January 2003 estimate of 1.009 million. The supply of housing rose to 4.1 months from 4.0 months in
December based on the current level of sales. This is noticeably above the tight Summer levels of 3.5 months, but still well below the historic average of 5.9 months. The drop off in January sales illustrates how it will be difficult for the housing sector to maintain the momentum it finished off with in 2004, even with an improving economy. Deutsche Bank expects a slowdown in the US housing market rather than a collapse.