Housing starts somewhat surprisingly jumped 22.2% in February.  Does this mean that the real estate market is on the road to recovery?

Total housing starts increased to a seasonally adjusted rate of 583,000, up from 477,000 in January.  With economists projecting only 450,000 starts in February, the results were quite startling.

I think in this case percentage change is a deceptive indicator.  Housing starts are so low right now that even after a huge jump as seen in February the value is still very low.

Even with housing starts rising, there is still a major problem: where are the buyers?  Sales dropped to an annual rate of only 309,000 in January, representing the lowest level spanning the entire 46 years that the statistics have been recorded.

Prices are still under great pressure.

It will take several consecutive months of improving trends to even suggest that the housing market is recovering.  And personally, even if things do get a little better in the spring and summer seasons, I won’t believe it’s a true recovery.

Interest rates are being pushed as low as possible to spur demand and prices still are falling.  Soon, some people on the sidelines will jump in thinking they are getting rock bottom prices.

While it’s nice to get interest rates under 5%, I think the best strategy right now is patience.