Tag Archives: housing starts

Permits Plunge But Starts Surge As Housing Data Suggests Rough Future Ahead

After small rebounds in July (after three ugly months prior), August was expected to see those gains consolidate but the picture was extremely mixed with Starts spiking 9.2% MoM and Permits plunging 5.7% MoM.

  • The surge in Starts is the best month since January 2018
  • The plunge in Permits is the worst month since Feb 2017

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-19_5-31-18.jpg?itok=ozQU_ELj

This suggests a rough time ahead for housing as Permits plummet to the lowest since May 2017…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-19_5-36-59.jpg?itok=vEXNBuVo

All of which suggests home builder stocks have further to fall…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-19_5-39-33.jpg?itok=J-i2yULd

Probably time for some more rate hikes!

Source: ZeroHedge

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Housing Starts Disappoint Dramatically, Fall Year-Over-Year

After Housing Starts collapsed 12.9% in June, July rebounded just 0.9% (dramatically missing expectations of a 7.4% bounce) as Permits rose 1.5% month over month.

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16_5-32-53.jpg?itok=Yw5mJEcS

A second month in a row with a massive miss to economists’ expectations…

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16_5-39-55.jpg?itok=ECUwd4Sa

Single-family starts remain very soft and multi-family starts barely rebound at all from June’s crash…

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16%20%281%29.png?itok=0nPZopEJ

And housing starts are now down year over year for The 2nd month in a row…

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16%20%282%29.png?itok=63lyZrhg

Permits rebounded very modestly in both single- and multi-family units…

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16.png?itok=XAlUoCAB

Two of four regions posted a gain in starts, with the South increasing 10.4 percent and the Midwest climbing by 11.6 percent; the Northeast declined 4 percent and the West plunged 19.6 percent, the biggest drop since January 2017

Finally we note that US home builder stocks have been tracking fundamentals dramatically lower all years…

https://www.zerohedge.com/sites/default/files/inline-images/2018-08-16_5-30-08.jpg?itok=jvRx73Xz

Time for some more rate-hikes…

Source: ZeroHedge

Housing Starts, Permits Tumble In April

Having bounced notably in March, both Housing Starts and Building Permits in April tumbled (-3.7% MoM and -1.78% MoM respectively).

  • March building permits growth was upwardly revised from +2.5% MoM to +4.1% MoM
  • March housing starts growth was upwardly revised from +1.9% MoM to +3.6% MoM

Starts dropped 3.7% MoM in April – far worse than the 0.7% drop expected but while permits also dropped 1.8% MoM, this was slightly better than the expected 2.1% drop…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16_5-34-03.jpg?itok=8B4H7_68

For some context, Starts and Permits remain over 40% below their 2005/6 peaks…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16_5-32-15.jpg?itok=i-6Djf8L

Housing Permits breakdown…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16.png?itok=OoA8ZcQy

The driver of the tumble in housing starts is a 11.3% plunge in multi-family.. (single-family 893k vs 894k prior and multi-family 374k from 428k)

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16%20%281%29.png?itok=wf60mKdp

Three of four regions posted declines in starts, led by a 16.3 percent decrease in the Midwest and a 12 percent drop in the West.

Construction climbed 6.4 percent in the South, reflecting the fastest pace of single-family starts since July 2007.

As always, weather is blamed for any downside.

Source: ZeroHedge

Housing Starts, Permits Surge On Spike In Rental Units

Another day, another confirmation that the US economy is heating up just a little more than most expected.

https://s.hdnux.com/photos/46/01/60/9968677/5/920x920.jpg

With Wall Street expecting housing starts and permits of 1.234MM and 1.300MM, respectively, moments ago the US Census reported number that blew away expectations, with starts printing at 1.326MM in January, a 9.7% increase relative to the 3.5% expected, while permits jumped by 7.4% from 1.300MM to 1.396MM, on expectations of an unchanged print.

What is notable in today’s number is that single-family units were largely in line, declining for Permits from 881K to 866K, while single-family Starts rose from 846K to 877K, still well below November’s 946K.

So where did the bounce come from? The answer: multi-family, or rental units, which surged for Permits from 382K to 479K, while multi-family Starts surged from 360K to 431K, the highest number since December 2016.

Here is the visual breakdown, first Starts:

https://www.zerohedge.com/sites/default/files/inline-images/housing%20starts%20jan%202018.jpg?itok=lb-HjIWq

then Permits:

https://www.zerohedge.com/sites/default/files/inline-images/housing%20permits%20jan%202018.jpg?itok=IO5Vk_Jp

While it is very early to infer causality, the jump in rental unit construction could potentially add a modest disinflationary pressure to rents, which in recent months have seen declines across some of America’s largest MSAs. Whether or not this impacts Fed policy is too early to determine.

Source: ZeroHedge

Housing Starts Unexpectedly Sink, Multi-Family in Huge 34% Retreat Year-Over-Year

Construction spending for the second quarter is off to a slow start as judged by housing starts. The Econoday consensus was for a 1% rise. Instead, starts declined nearly 5% from the initial June report, now revised lower.

Construction Indicators Slide

Mortgage News Daily reports Construction Indicators Slide, Housing Starts Suffer.

After posting unexpectedly high numbers in June, all three residential construction indicators lost ground in July, and one, housing starts, is now running below its year-ago rate. While the softening is primarily in the multi-family sector, starts have declined in four of the last five months and permits in three of the last four.

The U.S. Census Bureau and the Department of Housing and Urban Development said privately owned housing starts were at a seasonally adjusted annual rate of 1,155,000 units, a 4.8 percent decline from June’s estimate of 1,213,000, which was revised down from 1,215,000. July starts were down 5.6 percent from the 1,223,000-unit annual rate in July 2016.

Starts failed to meet even the lowest predictions of analysts polled by Econoday. Their estimates ranged from 1.174 million to 1.250 million with a consensus of 1.225 million.

Single family starts were at a rate of 856,000, down 0.5 percent from a month earlier but 10.9 percent higher than the same month in 2016. Multifamily starts plunged 17.1 percent to 287,000 units and are down 35.2 percent year-over-year.

The performance of permits was like that of housing starts, down 4.1 percent to a seasonally adjusted annual rate of 1,223,000 units. Permits however held on to an annual increase of 4.1 percent. The June permitting rate was revised higher, from 1,254,000 to 1,275,000.

Analysts had expected permits to decline, with a consensus estimate of 1.246 units. Here again the drop was outside the low end of the range of 1.230 to 1.270 million units.

Authorizations for single-family homes were at a seasonally adjusted rate of 811,000, unchanged from June and 13.0 percent higher on an annual basis. Multi-family permits were 12.1 percent lower than the previous month at 377,000. This was down 11.7 percent year-over-year.

Permits:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19c1.png?w=1249&h=700

Starts:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19b1.png?w=1258&h=700

Units Under Construction:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19a.png?w=1275&h=700

Second-Half Outlook:

Econoday came up with this overall assessment: “Putting all the pieces together: starts are down 5.6 year-on-year in weakness offset by permits which are up 4.1 percent. Permits are the forward looking indication in this report and today’s news, despite July weakness and general volatility in the data, is good. The housing sector, even with starts being soft, looks to be a contributor to the second-half economy.”

While it’s true that it takes a permit to begin construction, a permit does not guarantee construction will start anytime soon. At economic turns, they won’t.

Even assuming those permits turn into starts, the data still does not look to be a contributor to the second-half economy.

The number of permits and starts for multifamily explains what you need to know. 5-unit or more buildings will add more to construction spending numbers than 1-unit buildings. Permits and starts for multifamily structures plunged.

By Mike “Mish” Shedlock

NAR Cites “Housing Emergency” as Starts Unexpectedly Dive 5.5 Percent: NAR “Befuddled”

https://s14-eu5.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fblog.newinhomes.com%2Fwp-content%2Fuploads%2F2017%2F05%2Fconstruction-6-642x336.jpg&sp=e923574909156e73634c83abbc3a079a

The second-quarter economic report misery continues in a major way today with housing starts and permits unexpectedly falling.

The Econoday consensus was was for starts to rise 4.35%. Instead, starts fell 5.5%. Adding insult to injury, April was revised lower by 1.37 percentage points making the consensus estimate off by an amazing 11.22 percentage points.

The bad economic news keeps building, this time in the housing sector. Housing starts fell an unexpected 5.5 percent in May to a far lower-than-expected annualized rate of 1.092 million with permits likewise very weak, down 4.9 percent to a 1.168 million rate.

All components show declines with single-family starts down 3.9 percent to a 794,000 rate and permits down 1.9 percent to 779,000. Multi-family starts fell 9.7 percent to 298,000 with permits down 10.4 percent to 389,000. Total completions did rise 5.6 percent to a 1.164 million rate, which adds supply to a thin market, but homes under construction slipped 0.7 percent to 1.067 million.

Adding to the bad news are downward revisions to starts including April which is now at 1.156 vs an initial 1.172 million. Looking at the quarter-to-quarter comparison, starts have averaged 1.124 million so far in the second quarter, down a very sizable 9.2 percent from 1.238 million in the second quarter. Permits, at an average of 1.198 million, are down 4.9 percent.

Residential investment looks to be yet another negative for second-quarter GDP.

Housing Emergency?

Mortgage News Dailly has some amusing comments by Lawrence Yun, the National Association of Realtors chief economist, in its report Drop in Housing Starts Could Intensify Inventory Issues.

The negative report prompted the following statement from the National Association of Realtor’s Chief Economist Lawrence Yun. “Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further. The falling housing starts and housing permits in May are befuddling given the lack of homes for sale and the quick pace of selling a newly-constructed homes. Meanwhile, job creations of a consistent 2 million a year will push up housing demand further. One thing that moving up is the housing costs for consumers: higher home prices and higher rents.”

NAR “Befuddled”

Yun is befuddled. That’s hardly surprising given that it does not take much to befuddle economists.

Let me clear up the confusion:

  • People cannot afford homes so they are not buying them.
  • Builders will not purposely build homes to sell at a loss.
  • The alleged demand for new homes is imaginary.

Such analysis is beyond the scope of most economists, so I am happy to help out.

By Mike “Mish” Shedlock

Housing Starts Dive 18.7 Percent: Mortgage Rates Soar

The often volatile housing starts numbers took another dive this report, down 18.7% in November according to the Census Bureau New Residential Construction report for November 2016.

Housing starts 1959-Present

https://mishgea.files.wordpress.com/2016/12/housing-starts-2016-11a.png?w=625

Year-Over-Year Detail Since 1994

https://mishgea.files.wordpress.com/2016/12/housing-starts-2016-11c.png?w=625

New Residential Construction Details

  • Permits down 4.7% from October
  • Permits down 6.6% from year ago
  • Starts down 18.7% from October
  • Starts down 6.9% from year ago
  • Completions up 15.4% in October
  • Completions up 25% from year ago

Mortgage Rates Soar

https://mishgea.files.wordpress.com/2016/12/mortgage-rates-2016-12-16a.png?w=625

Mortgage rates have risen 104 basis points (1.04 percentage points) since July 8.

As I have pointed out, this is bound to affect the housing market sooner or later. Sooner means now.

Each quarter-point hike will affect mortgage rates correspondingly until the long end of the curve refuses to rise further. At that point, we will be in recession.

Still think three hikes are coming in 2017?

By Mike “Mish” Shedlock

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