U.S. Watch
Housing starts bounced back sharply with a 9.3% increase to 685K in November (from 627K in the prior month). That's the highest in a year and a half. While it is true that the gainswere driven by multi-family homes (up 25.3% in the month) we actually firmly believe that single-home construction segment will grow at a brisker pace in 2012. According to the National Association of Home Builders, the index pf prospective buyers rose to a44-month high in November. This gauge, which leads single-family home starts by about three months, suggests that starts could rise to around 600,000. As today’s Hot Chart shows, this would be a sizeable improvement from the current level of 450,000 (buildershave no inventories on hand) but still very low by historical standards. Given the current glut of inventories in the resale market, we do not expect single-family home starts to revert back to trend (which we estimate at around 1million units for that segment)anytime soon. Having said this, 450k to 700K is a very sharp improvement.