By the Numbers
Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.
The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.
These swings are mostly noise. The real story is that single-family starts have gone nowhere for the last 10 months. Starts rose sharply last October but have failed to show any further net movement since then. As a result, single-family residential construction spending has gone flat in recent months as well.
Our bet is that homebuilding will continue flat through the rest of the year. Inventories of unsold new homes have risen enough that homebuilders will be loath to ramp up production any further unless and until demand rises first, and home demand has also been stubbornly flat, as evidenced by data on new-home sales. The picture within each major region of the country largely mirrors the nationwide profile.
With total and single-family starts data diverging so markedly, it is clear that multi-family starts continue to swing wildly, as is their wont. Beneath the short-term swings, multi-family starts have been trending lower for two years. The multi-family unit construction process is so protracted that multi-family construction spending has only recently headed lower. With that long gestation and with multi-family starts still declining somewhat, however, the declines in multi-family construction spending will continue for quite a while. Still, multi-family construction accounts for less than 20% of total spending on new housing construction, so the overall trend in homebuilding will be dominated by single-family construction, and there, again, the trend is steady but flat.
Michael BazdarichProduct Specialist/Economist
Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.
Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.
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