The housing market showed significant resilience as housing starts surged in December for the strongest reading since 2008. A recovery in the housing sector is considered key to restoring the economy to full health. With inflation still muted, consumer spending gained ground in December. For the week ended January 18, 2013, the S&P 500 Index was up 0.9% to 1,486. The yield on the 10-year U.S. Treasury note was down 2 basis points to 1.87%.
Housing starts were up 12.1% over the previous month—the best showing since June 2008. Single-family home starts were up 8% while multifamily starts climbed more than 20%. Compared to the third quarter, annualized housing starts in the fourth quarter were 82% higher, for the strongest jump since the 1980s.
During 2012, builders started work on 708,000 homes. That's an increase of 28.1% over 2011 and the most starts since 2008, shortly after the housing collapse. Nevertheless, housing starts are still below the historic annual average of 1.5 million.
All 12 districts of the Federal Reserve reported growth from mid-November to early January, according to the January Beige Book report. Consumer spending was higher in every region partially due to holiday sales, which were somewhat higher than in 2011. Tourism and transportation also rose across much of the United States. Auto sales were strong despite consumers' lingering caution about making big purchases. Wages and employment were more or less unchanged.
This coming week, reports are due on existing-home sales (Tuesday), leading indicators from the Conference Board (Thursday), and new-home sales (Friday).
source: Vanguard Group
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