Housing starts bounce, permits fall

The latest home construction numbers just hit the tape. Here are the details ...

* Starts popped up 9% to 1.525 million units in February from 1.399 million in January. That's above the consensus forecast for 1.45 million, but still down 28% from a year earlier.

* Building permit issuance slumped again -- 2.5% to 1.532 million units from 1.571 million a month earlier. That's the 11th drop in the past 12 months. Permit issuance is down almost 29% YOY.

* Regionally, starts fell the most in the Northeast -- 29.7%. They also declined in the Midwest (-14.4%), but rose in the South (+18%) and the West (+26.4%)

The housing starts figures have been incredibly volatile the past few months. Big down months (October 2006, January 2007) have been followed by partial rebounds, like we saw in February. However, the trend in starts is clearly down. Given the still-enormous overhang in new and existing homes for sale, I expect to see further declines in 2007 as builders try to get inventory back in line with sales.