New housing starts jumped a whopping 22 percent in February, compared to January, which is exciting big headlines across the financial press. "Housing Starts Unexpectedly Rise," reports the Wall Street Journal. "U.S. Housing Starts Show Surprise Surge" blared the Financial Times.
After seven consecutive months of declines, a 22 percent jump might be worth taking seriously. But but as we learned here almost three years ago new housing start data includes two main components, single family homes and multi-family homes (apartments, condominiums, etc.) And the data on multifamily homes are notoriously volatile. Quoting myself:
"Multifamily housing" includes everything from duplexes to high-rise apartment buildings... Turns out, construction of such structures is highly dependent on a specialized set of factors -- zoning decisions, changes in the tax code, speculative investment activity, et cetera.
Particularly in urban areas, breaking ground on a new condominium development or high-rise means jumping through an endless line of hoops. But since all the units that will eventually be built are counted as soon as a project is started, just a few new projects can mean a significant difference in overall housing start numbers, month to month
Single-family starts increased only 1.1 percent in February, remaining near a historical low. Construction of housing with two or more units jumped 82.3 percent.
Yesterday, I noted that growth in residential investment and consumer spending are among the early indicators that a recession is ending. But there's not much to be encouraged about yet, in the new housing numbers.