Tuesday, July 19, 2011

US Housing Data Release - 20 July 2011

US housing starts for June have provided another positive surprise from the property market. Starts rose 14.6% m/m to stand at a 6-month high at 629,000 – well ahead of the 575,000 expected and above all of the 71 predictions made at Bloomberg. Single family starts rose 9.4% - a 7-month high - while multi-family starts rose 30.4%. Building permits unexpectedly increased 2.5% (consensus was for a 2.3% fall) and this follows yesterday’s stronger-than-expected NAHB home builders sentiment index.

These data offer hope that housing is not going to be a drag on upcoming GDP data, but we have to remember that starts are still barely 25% of the size they were at the peak of the housing boom. Indeed, with consumer confidence remaining weak, housing is unlikely to be a major growth driver anytime soon.

Starts usually respond to movements in new home sales, which remain flat at rock-bottom levels, so we doubt this jump in starts, welcome though it is, represents the start of a new upward trend. It might just be a reflection of good weather facilitating catch up activity after the late Easter and severe storms depressed construction in previous months. Note single-family permits were little changed again; no sign of a change in the trend there.

Published: 20 July, 2011
written by: Bill Hubard , Chief Economist at Markets.com