NEW YORK (MainStreet) -- Why was the U.S. stock market taking off this morning – up 182 points within five minutes of trading? One reason – and it’s a big one – is that the housing market received two early Christmas presents this morning.
First up is fresh news from the U.S. Commerce Department that housing starts rose to an 18-month high in November 2011. New unit construction leaped 9.3% to 685,000 – the highest level since April 2010, the federal government reports.
But in a note of heavy caution, economists advise putting the pom-poms away until housing starts reach their normal, healthy levels of about 1.2 million new unit starts per month. That number seems to be light years away, even with the good news from November.
The second positive report out today is the National Association of Home Builders/Wells Fargo Housing Market Index for December, which shows a moderate increase (from an index of 19 to 21 on a month-to-month basis). That’s the third straight month of increasing index numbers for the HMI, and is the index’s highest point since May 2010.
“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said NAHB Chief Economist David Crowe in an official statement. “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.”