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Look Carefully at the Housing Numbers

Homebuilding stocks are up this morning as January Housing Startswere well above expectations—but does anyone bother to read these reports anymore? The surge was all multi-family.

Multi-family starts—which are only about one-quarter of starts—were up 78 percent.

Single family starts—about three-quarters of all start activity—were down 1 percent.

And permit activity (an indicator of future activity) was weaker than expected across the board—huh? So is there a surge in activity or isn't there?

The devil is in the details—or, rather the building codes. There were changes in building codes in a number of states at the end of 2010, including New York, Pennsylvania, and California. The thinking is that builders likely filed for additional permits at the end of the year to get around the new building codes, which contributed to the surge in construction. Now that the surge in applications is over, permit activity is weaker.

Got that?

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