skip navigation

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.

December Housing Starts: What Goes Up...

The adage invoked above does not always hold for economic data. The economy is, after all, growing, so most indicators therein will tend to increase over time. However, occasionally the data show one-month gains—or declines—that look to be a break from preceding trends. Those will either be reversed—going up then down—or else sustained, signaling a break in trend.

So it is with this morning’s housing starts release for December. The November release a month ago showed a sharp 5.3% increase in single-family housing starts that pulled that indicator way above previous trends. Our take was that this increase was probably not a break to a new, higher trend, but more likely a reflection of a catch-up in activity following hurricane-depressed starts in September and October.

The latter now does indeed seem to be the case, given that December single-family starts showed an 11.8% decline (from November’s revised 6.9% increase). The December decline pulls single-family starts back to levels right in line with the flat trend seen since late-2016.

Our take is that the December level, and the similar levels seen throughout 2017 until November, represent the ongoing reality. Supporting this contention is the fact that single-family starts in the South—where over 50% of US homebuilding occurs and where hurricane effects were focused—showed these same November/December swings and also descended in December back to levels right in line with pre-November, flat trends.

We have been countering the widely held contention that US economic growth has accelerated over the last few months, arguing instead that the gains seen in some indicators are one-time blips related to post-hurricane activity. So far this month, data on payroll jobs, industrial production, and now housing starts have been in line with this position, while retail sales have not. On to the next indicator!

Sales and Starts of New, Single-Family Homes
Sales and Starts of New, Single-Family Homes
Source: Census Bureau. As of 31 Dec 17

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 44 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.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2021. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.