My gut reaction to today’s better-than-expected housing start figures? Indicative of supply inertia moreso than any real demand, esp. in terms of permits. At least one well-known analyst seems to have agreed with me:

So why are permits up? Well, says building analyst Ivy Zelman, “This is supply. It is not indicative of demand.” She notes that builders, and the banks funding them, have money in the ground already, in finished lots. “You have to put a house on it. Vertical construction continues even though demand is not strong.” If you don’t put a house on it, the land is a total loss. If you put a small, cheap house on it, maybe you can recoup at least the cost.

CNBC’s Diana Olick has much more in her post that’s worth reading on this. But the starts number here might not be all that it seems; be careful reading too much into it.