Downward trend in housing investment will persist

Housing starts continued to ease during the fourth quarter of last year, to an annualised 202,855, from 221,709 in the prior quarter. Nevertheless, it is possible that overall residential investment actually rebounded slightly over the final few months of last year, thanks to continuing construction on condo projects started in earlier quarters. As a result, the economy might have averted a third consecutive quarterly decline in residential investment. Nonetheless, the downward trend in existing home sales and pre-construction condo sales, far more timely barometers of housing demand, suggests that residential investment will resume its downward descent in 2013.