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Housing Starts Up, But Look Behind the Numbers

The housing news continues to be mixed. The Commerce Dept. released its monthly numbers on new housing starts, showing an increase of 1.5% to 598,000 units, the highest level in nine months. Builder KB Home announced it was re-entering the Mid-Atlantic region, which it had left in 2007.

Peel behind the numbers, however. Single-family homes, which make up 85% of the starts, actually fell, the first decline since January. It was only the big jump in multi-family construction that allowed the overall number to rise.

Meanwhile, yesterday, the Mortgage Bankers Association reported that’s its index of loan applications fell 8.6% for the week ending Sept. 11. That number is seasonally adjusted for the normally expected slow down in back to school season. On an unadjusted level, applications fell 18%.

Perhaps that’s why shares of homebuilders fell on today’s “good” news. “The claim that housing is out of the woods is greatly exaggerated,” said Jeffrey Gundlach, the chief investment office of money management firm TCW recently.

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