Housing Starts Do an About Face

Do better-than-expected housing-start data give reason to be optimistic that an upswing in the housing market is not far off?

Analysts predicted that the number of builders breaking ground would drop 0.2 percent in March, but were surprised to see housing starts climb 0.8 percent above February figures, according to data from the Department of Commerce.

Building permits, an indicator of future construction, also rose 0.8 percent in March.

Why the increase? An unseasonably warm March likely prompted builders to get their hands dirty sooner than usual this spring. But consumer demand is also starting to heat up as prices cool down.

Tuesday's news may cheer homebuilders, whose confidence was reported on Monday to be flagging. The National Association of Homebuilders said its confidence index fell to the lowest levels of the year, based on a monthly survey of U.S. homebuilders. The index fell to 33 from 36. Any reading below 50 is considered "poor."

Homebuilders are not out of the woods yet, however. They are still contending with sluggish single-family home sales and high inventories. And for now, the ailing mortgage market still poses a problem.

Mortgage payment delinquencies are at a four-year high, leading lenders to tighten their standards and quell consumer demand.

U.S. homes entering foreclosure in the first three months of 2007 doubled from the same period last year, according to a statement issued on Monday by research firm Foreclosures.com.

Keep in mind, however, that that stat amounts to a rise from 83,154 to 168,829 U.S. homes filing for foreclosure in the first quarter, which is a relatively small percent of U.S. homes overall.

by Liz Gunnison