Quotes from TD Economics:
- Housing starts come in a touch weaker than expected in January. Despite the headline number coming in weaker than expected, the blow was somewhat softened by the fact that the majority of the declines were concentrated in the Midwest, with poor weather likely having weighed on construction activity. Moreover, some pullback in single-family starts was expected in Jan, especially after last month's outsized gains.
- From a demographic standpoint, the number of households rose by 1.6 million over the course of 2014, with housing construction having only grown by 1.0 million units during this same time. Given the level of underbuilding that we have seen over the past several years, we believe that there is still plenty of upside in the years ahead.
- Moreover, with an improving labor market finally starting to put upward pressure on wages, credit conditions continuing to ease, and the 30-year fixed mortgage rate 60bps lower than year-ago levels, the case for stronger housing demand has never looked better. We look for housing starts to end 2015 at 1.4 million units, before accelerating to 1.6 million by the end of 2016.
