Reuters - Video

EDITION: U.S. | U.K. | IN

Business

Crack in housing recovery foundation?

Wednesday, February 20, 2013 - 02:30

Feb. 20 - January housing starts were far worse than forecasts, but a closer look reveals the cracks in the housing recovery may not be that worrisome after all. Bobbi Rebell reports.

▲ Hide Transcript

View Transcript

The sound of hammers building new homes is music to the ears of economists. But last month it was a bit quieter. Housing starts fell much more than expected- down 8.5 percent- in large part because of a steep 24% drop in multi-family housing. But housing data is volatile. Yelena Shulyateva of BNP Paribas: SOUNDBITE: YELENA SHULYATEYVA, U.S. ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "This is just one month of data and multi-family starts where we saw the decline is a particularly volatile series. Single-family starts increased for two months in a row and building permits which is an indicator of future activity as well saw an increase." In fact, permits increased at their highest pace since June of 2008. PNC Bank's Gus Faucher says the housing recovery will continue to build momentum: SOUNDBITE: GUS FAUCHER, VICE PRESIDENT AND SENIOR MACROECONOMIST, PNC FINANCIAL SERVICES GROUP (ENGLISH) SAYING: "The conditions for underlying growth in the housing market are very good. Affordability remains very high. Prices are down by about 1/3 from their peak prior to the recession. Mortgage rates remain very low. Credit is becoming more available. Job gains are supporting consumer confidence and making people a little bit more willing to buy homes." But that demand may not be so easily met according to David Crowe, chief economist at the National Association of Home Builders. SOUNDBITE: DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS (ENGLISH) SAYING: "I think that the builders continue to have trouble getting ahead of demand because they are having difficulty borrowing money to do that- to place their homes for sale. And so if that continues and we know we are going to see continued demand- there is a lot of pent up demand from people having waited for 2 or 3 years. Employment is improving enough to bring people back into the market. " One key market to watch: rentals. Thanks to a still-tight credit market and the appeal of flexibility to the newly employed. SOUNDBITE: DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS (ENGLISH) SAYING: "What we have is a lot of young households who also postponed forming their own independent household. Now that they are getting jobs, now that they feel a little more comfortable about their economic future they are going out and becoming renters and that has been the reason we have had a very strong increase in rental construction." If fact, Toll Brothers, the largest U.S. luxury homebuilder says its building fewer homes- and is now going to enter the rental market.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Crack in housing recovery foundation?

Wednesday, February 20, 2013 - 02:30

Editors' Picks »

Most Popular »

Moving Pictures »

Dance of the northern lights Dance of the northern lights

Mon, 20 Oct, 2014 - (1:08)

Images of September Images of September

Thu, 02 Oct, 2014 - (1:00)

Still missing – MH370 Still missing – MH370

Fri, 05 Sep, 2014 - (2:05)

Burning Together Burning Together

Mon, 01 Sep, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, 22 Aug, 2014 - (3:12)

Images of August Images of August

Fri, 29 Aug, 2014 - (1:00)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, 11 Aug, 2014 - (2:27)

Burned memories Burned memories

Fri, 08 Aug, 2014 - (3:02)

Images of July Images of July

Fri, 01 Aug, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, 11 Jul, 2014 - (1:00)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, 19 Feb, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, 10 Jan, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, 29 Aug, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, 29 Aug, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, 05 Aug, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, 17 Dec, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sun, 09 Dec, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Mon, 10 Dec, 2012 - (10:39)