Us in housing starts 'surprise'

Annual housing starts in the US have increased in spite of the ongoing subprime crisis…

According to the Commerce Department, the number of housing starts actually declined by 0.6% in February, but the annual figures painted a more positive picture. 

Annual starts came in at 1.065 million units, which was higher than the 990,000 that had been forecast. But the reading was buoyed by a jump in multiple family home construction, while single family home starts fell sharply.

Josh Stiles, bond strategist at IDEAGlobal in New York, urged caution despite the positive results: "Regarding the housing starts, I wouldn't put anything in that little bounce. The housing industry is in a recession," said

Morgan Stanley economist David Greenlaw commented: "The keys to generating stability in the housing market are improved levels of affordability, a correction of the inventory imbalance, and a restoration of borrowers' ability to access mortgage credit at a reasonable cost.”In sum, we look for about a 10% drop in real home prices over the next year.