The U.S. Commerce Department reported Thursday morning that housing starts fell 3.3% in December, but still managed to increase 2.2% for the year. 1.6 million housing units were built during the year, remarkable when you consider that housing starts are one area that is usually severely affected in a recession. The figure is the second best in 15 years.
Newport Communications Senior Economist Jim Haughey says the December decline in housing starts was due to an unusually high November for multi-family starts due to warmer than seasonable weather for builders. He notes the December level was only slightly below the year 2001 average month.
“The important data for the future is that building permits rose 4% in December," Haughey says. "December permits were 5% above starts, 11% above October permits and slightly above the average month in 2001,” he says.
Helping the housing market along were cuts in interest rates by the Federal Reserve last year to their lowest level in 40 years.
According to Haughey the strong housing report is evidence that consumers have the necessary confidence to send the manufacturing sector into a recovery early in 2002.