After meetings between recently re-elected President Barack Obama and Republican/Democrat officials, the likelihood of avoiding the dreaded US fiscal cliff has increased and optimism regarding the nation’s economic recovery has improved.
Today America received a further boost as October US Housing Starts defied expectations and soared to a four-year high, mainly caused by an 11.9 per cent leap in work on multifamily homes.
Commerce Department figures revealed that Starts rose to an annual rate of 894,000 – despite economists forecasting a drop to 840,000. In a statement accompanying the statistics the Commerce Department asserted that Superstorm Sandy had only a slight impact on estimates with the number of ‘non-responses […] not significantly higher than normal’.
This 3.6 per cent rise in new residential construction is the largest recorded since July 2008.
UniCredit Group’s chief economist Harm Bandholz predicted an annual starts rate of 870,000 and stated that: ‘Housing is absolutely going in the right direction. Excess supply has been wound down and there’s a steady increase in demand. That’s good for construction.’
All in all, this news complements the six-year high figure of 46 recorded by the National Association of Home Builders Index of Builder Confidence yesterday and many industry experts feel that the situation will continue to improve.
One chief financial officer recently commented: ‘We’re in a strong phrase of the recovery. It’s a function of five years of pent-up demand being released [and] affordability and rising prices is also spurring people to buy.’
Meanwhile, during his November 15th speech Federal Reserve chairman Ben Bernanke asserted: ‘Continued weakness in housing – reflected in falling prices, low rates of new construction and historic levels of foreclosure – has proved a powerful headwind to recovery. It is encouraging, therefore, that we are seeing signs of improvement in the housing market in most parts of the country’.
However, it’s not all good news as the amount of building permits applied for/issued eased off from last month’s surge, declining by 2.7 per cent to an annual rate of 866,000. Although the number of permits for one-family units rose to a more than four-year high the number of permits for multifamily constructions dropped. As building permits provide a good indication of future construction this current increase in housing starts may not continue into next month.
As of 15:25 pm
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