Total housing starts in February were up 27.7% from the February 2012 pace. Single family starts were up 31.4%. This is a very strong year-over-year increase.
Even with this significant increase, housing starts are still very low. Starts averaged 1.5 million per year from 1959 through 2000, and demographics and household formation suggest starts will return close to that level over the next few years. This means starts will probably increase more than 60% from the current level (917,000 SAAR in February).
Residential investment and housing starts are usually the best leading indicators for the economy. Nothing is foolproof as a leading indicator, but this suggests that the economy will continue to grow over the next couple of years.
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