Today's Horrific Housing Report Was All About One US Region | North Salem Real Estate

Earlier this morning we saw that housing starts unexpectedly plunged 9.3% to an annualized rate of 893,000.

On the face of it, the report was ugly, considering all the talk about the recent housing snapback.
It's important to note that the miss was entire due to one region: the South.

Housing starts plunged 29.6% in the South, driven by weakness in single family units. "All the hit is in the south, where starts plunged by 29.6%, the biggest ever monthly drop, despite gains in each other region," wrote Ian Shepherdson at Pantheon Macroeconomics.

Starts were actually up in the rest of the country. In the Northeast, housing starts were up 14.1%, driven mostly by multi-family starts. In the Midwest they were up 28%, and in the West they were up 2.6%.

It wasn't immediately clear what was behind the sudden plunge in the south. "But homebuilders are being constrained by a shortage of labour and lots," Paul Diggle at Capital Economics.
"Labour shortages are particularly prevelant in the carpentry and framing trades required at the start of the construction process. And shortages of lots mean that land prices are rising more quickly than the historical relationship with house prices would suggest."

While the headline was weak, Eric Green at TD Securities wrote that "the report is exceptionally uneven and on balance is not an indication of a significant turn in housing construction."


Read more: http://www.businessinsider.com/housing-starts-mostly-fell-in-the-south-2014-7#ixzz37jbySQiN