This is the note which HSBC sent out to clients on the Housing Starts Data. There is no recovery or stability brewing in housing market.
* Starts are down 39% over the last three months, down 57% since last June, and down 79% since the cycle high in January 2006
* fell 5% to 521k (consensus 525k), also hitting a new record low. Both starts and permits have fallen for seven straight months, with permits falling 54% over this period
* In spite of this reduced activity, the month’s supply of new homes for sale rose to an all-time high of 12.9 months as of December. This overhang is likely to keep new construction quite low until home sales recover
* Evidence of any sales improvement has been scant, although December rose for the first time in four months (+6.3%), and the yesterday’s NAHB index showed a slight improvement in buyer traffic (+3pts to 11)