Wednesday, June 16, 2010
8:30 Housing Starts and Building Permits
Release Details
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At:
http://www.census.gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* As expected, housing starts boomed in April as builders began
672,000 new homes, well above the 655,000 expected and the
highest level since October 2008.
* Building permits fell 11.5% from 685,000 to 606,000. The median
estimate called for permits to decline to 680,000.
Key Factors
* The surge in construction came after the National Association of
Home Builders’ sentiment index rose from 15 to 19 in April, the
largest monthly increase since April 2009.
* The drop in permits is a little strange. During normal housing
conditions, a decline in permits would foreshadow a possible
slowdown in housing starts. However, the relationship between
permits and starts has weakened since the housing crash.
* The drop in permits is more likely due to builders using
previously issued permits for new construction. In the past,
builders have built up a supply of permits without beginning new
construction. As the housing sector rebounded, builders were able
to utilize their supply of non-expired permits instead of applying for
new permits. Until the supply runs out, permit growth may remain
slow even though housing starts expand significantly.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
----------------------------------------------------------------------------
Economic Calendar for the Week of May 17 to May 21
Tuesday, May 18
8:30 Housing Starts and Building Permits
Release Details
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At:
http://www.census.gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* Residential construction expenditures received a nice boost as
February’s housing starts level was revised up to 616,000 from
575,000.
* Building permits increased by 48,000 to 685,000 in March. They
are at their highest level since October 2008.
Key Factors
* This was the best housing report since October 2008.
* After languishing roughly at or below 500,000 since October 2008,
single-family starts have finally moved upward. They rose to
536,000 in the revised February data and held at that level in March.
* Multifamily units remained below 100,000 for the sixth time in the
last seven months.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
------------------------------------------------------------------------------------------
Friday, April 16
8:30AM - Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* New housing starts declined 5.9% m/m in February to 575,000.
* The consensus estimate called for starts to fall slightly more to
570,000.
* Building permits declined from 622,000 permits to 612,000.
* The consensus estimate called for permits to fall to 601,000.
Key Factors
* In a somewhat surprising note, starts in January were revised up
from 591,000 to 611,000. We believed, along with many economists,
that home construction would wane as the fiscal and monetary
stimulus programs expire by June 2010. Homes constructed after
December would probably not come on-line until after the
expiration date, and the new homes would be subjected to
consumers who have less incentives to make a new purchase.
* The strength in the home sales numbers makes us wonder if
homebuilders believe the stimulus plans will be extended beyond
June 2010.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
---------------------------------------------------------------------------------------------
WEDNESDAY, FEB. 17
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates. Permits lead starts, but
permits are not required in all regions of the country, and the level
of permits therefore tends to be less than the level of starts over
time.
Highlights
* Housing starts continued their up one month, down the next trend
as starts fell 4.0% from 580,000 in November to 557,000 in
December.
* The consensus expected starts to fall only 8,000 to 572,000.
* While we had predicted starts would fall significantly, we based
our forecast on continued volatility in the multi-family sector.
* However, this was not the case as multi-family starts actually
increased from 90,000 starts in November to 101,000 in December.
* The drop in starts was completely attributed to a lack of single-
family construction.
* Single-family home starts fell 6.9% from 490,000 in November to
456,000.
* In contrast, building permits increased 10.9% from November's
589,000 level to 653,000.
* The jump in permits was due to increased demand in both the
single and multi-family sectors. Single family permits increased
8.3% to 508,000 while multi-family permits rose 20.8% to 145,000.
Key Factors
* It seems builders are well aware of the pitfalls of starting new
construction given that the latest increases in existing and new
home sales were propped up by government support.
* Since new homes constructed today would not come onto the
market until after the government stimulus expires, it makes sense
that builders would hold off on beginning new single-family homes
until they are sure demand has stabilized.
* The increase in permits does not necessarily mean that housing
starts will also increase in the near future. Builders often get
permits well in advance of construction. If the market does not
rebound ,they will let the permits expire without starting a new
home.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
______________________________________________________
Wednesday, January 20, 2010
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 a.m. Eastern around the 16th of the month
(data for one month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing.
Building permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates.
Permits lead starts, but permits are not required in all regions of the
country, and the level of permits therefore tends to be less than the
level of starts over time.
Highlights
* Housing starts jumped 8.9% in November from 527,000 to 574,000.
That was in-line with the median estimate.
* In November, multi-family starts rebounded and grew 67% as
92,000 multi-family units were started.
* Single-family units rose from 472,000 in October to 482,000 in
November.
* Building permits increased 6.0% to 584,000 as single-family
permits rose 5.3% to 473,000 units and multi-family permits
increased 8.8% to 111,000 units.
* Housing completions rose 8.7% to 810,000. The lackluster number
of starts over the last few months will slowly drain the number of
completions.
Key Factors
* The rise in starts came in the face of declining sentiment among
homebuilders.
* In fact, the main reason for the increase was due to the movement
back to equilibrium in multi-family construction.
* Over the previous six months, multi-family starts averaged 96,000,
including a drop to 55,000 in October.
* Without the reversion back to the mean in multi-family starts, total
housing starts increased only 2.1%.
* After briefly breaking out above 500,000 in July and September,
new single-family starts seem stuck at their current level.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgages seems to have helped, and starts have begun to
stabilize.
--------------------------------------------------------------------------------------------------
Wednesday, December 23, 2009
10 a.m. New Home Sales
* Importance (A-F): This release merits a C-plus.
* Source: The Census Bureau of the Department of Commerce.
* Release Time: 10:00 ET around the last business day of the month
(data for month prior).
* Raw Data Available At: http://www.census.gov/const/newressales.
pdf
The report indicates the level of new privately owned one-family
houses sold and for sale. New home sales usually have a lagged
reaction to changing mortgage rates. They also tend to be stronger
early in the business cycle when pent-up demand is strong, and
they fade later in the cycle as the demand for housing is sated.
In addition to home sales, the market monitors the number of
homes for sale relative to the current sales pace. As this inventory
measure falls (rises), housing starts tend to rise (fall). Finally, the
median home price provides an indication of inflation in the
housing sector, though only year/year changes provide any
meaningful information.
Highlights
* New home sales rose 6.2% in October to 430,000. The consensus
expected new sales to remain at about the same as level as
September, 404,000.
* The median home price rose from $210,700 to $212,200 while the
average price declined from $284,600 to $261,100 in October.
Key Factors
* The large increase in new home sales should not have been
unexpected.
* For the past several months, existing home sales have surged as
new homebuyers have rushed into the marketplace in order to beat
the original deadline for the first-time homebuyers tax credit.
* Increases in new home sales have generally lagged the jump in
existing home sales and last month's sales unexpectedly declined
from 415,000 to 405,000. The consensus took the decline as a sign
that new homebuyers were not interested or able to afford a brand
new home and instead were settling for cheaper existing homes.
* Fortunately for new homebuilders, this was not necessarily true.
The distribution in price level between September and October was
very comparable and was skewed heavily toward less expensive
homes. This suggests that first-time homebuyers did make up a
significant portion of the new homes sold.
Big Picture
* Since the deadline for the first-time homebuyer tax credit was
extended until April 2010, we expect consumers to feel less rushed
into buying a home. Given that interest rates are expected to remain
near the zero-bound, there is less of an incentive to buy a home
before April and new home sales should moderate until the middle
of next year.
__________________________________________
WEDNESDAY, DEC. 16, 2009
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 a.m. Eastern around the 16th of the month
(data for one month prior)
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing.
Building permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates. Permits lead starts, but
permits are not required in all regions of the country, and the level
of permits therefore tends to be less than the level of starts over
time.
Highlights
* The talk that housing starts were stabilizing hit a snag in October
as new housing starts plummeted 10.6% to 529,000 units from
592,000. The consensus forecasted an increase in starts to 600,000.
* The details in the data don't look pretty.
* Single family starts fell 6.8% to 476,000 and is at its lowest level
since May.
* Multi-family starts fell a whopping 34.5% as only 53,000 new units
were started. Multi-family starts have never been this low since the
index was created in 1959.
* Building permits were higher than housing starts, but still declined
4.0% to 552,000. Not all permits are used to build a house and the
drop from September could be seen as an indicator that starts in
November could continue to decline.
* Total homes currently under construction fell 3.4% from its
previous historical low of 580,000 in September to 560,000 units in
October.
* Housing completions increased 1.9% to 740,000 units.
Key Factors
* It is difficult to analyze this month's data. On one hand, it's easy to
state that builders realized that the housing market continues to be
oversaturated with excess supply and builders are again making
drastic cutbacks. However, while single-family starts declined a
substantial amount, the levels are still over 100,000 higher than they
were at January's lows. If builders truly wanted to pull back from
the market, it would be expected that single-family starts would fall
by a much-greater percentage.
* It could be that builders were worried about the possible end to
the first-time homebuyers tax credit. Without the additional stimulus
money, many potential buyers would be priced out of the market. In
October there was still a hot debate in Congress on whether or not
to extend the credit. Even though it eventually passed, builders may
have held up on new starts until they got a better understanding of
what was going to happen on the fiscal side.
* It's tougher to grasp why multi-family units fell to new historic
lows. All economic fundamentals suggest heightened demand for
rental units over the next several years, which would obviously act
as an incentive for building multi-family properties. However, as
more single-family homes enter foreclosure, these homes are
becoming very attractive to investors to be used as rental
properties. Many families would prefer to live in a single family
home rather than an apartment building.
* The big question now is: Where do starts go from here? At the
beginning of the year, we thought housing starts would stay
around 500,000 through the middle of 2010. Incentives through
fiscal policy and quantitative easing propped up the real estate
market and helped push starts to between 580,000 and 590,000
units. If the decline in October was due to uncertainty regarding the
end date of the first-time homebuyer tax credit, then starts should
rebound back to the 580,000 to 590,000 unit range. If the decline is
due to oversaturation in the market, starts could fall precipitously
back to 500,000 units.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgages seems to have helped, and starts have begun to
stabilize.
8:30 Housing Starts and Building Permits
Release Details
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At:
http://www.census.gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* As expected, housing starts boomed in April as builders began
672,000 new homes, well above the 655,000 expected and the
highest level since October 2008.
* Building permits fell 11.5% from 685,000 to 606,000. The median
estimate called for permits to decline to 680,000.
Key Factors
* The surge in construction came after the National Association of
Home Builders’ sentiment index rose from 15 to 19 in April, the
largest monthly increase since April 2009.
* The drop in permits is a little strange. During normal housing
conditions, a decline in permits would foreshadow a possible
slowdown in housing starts. However, the relationship between
permits and starts has weakened since the housing crash.
* The drop in permits is more likely due to builders using
previously issued permits for new construction. In the past,
builders have built up a supply of permits without beginning new
construction. As the housing sector rebounded, builders were able
to utilize their supply of non-expired permits instead of applying for
new permits. Until the supply runs out, permit growth may remain
slow even though housing starts expand significantly.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
----------------------------------------------------------------------------
Economic Calendar for the Week of May 17 to May 21
Tuesday, May 18
8:30 Housing Starts and Building Permits
Release Details
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At:
http://www.census.gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* Residential construction expenditures received a nice boost as
February’s housing starts level was revised up to 616,000 from
575,000.
* Building permits increased by 48,000 to 685,000 in March. They
are at their highest level since October 2008.
Key Factors
* This was the best housing report since October 2008.
* After languishing roughly at or below 500,000 since October 2008,
single-family starts have finally moved upward. They rose to
536,000 in the revised February data and held at that level in March.
* Multifamily units remained below 100,000 for the sixth time in the
last seven months.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
------------------------------------------------------------------------------------------
Friday, April 16
8:30AM - Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html.
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation. An
increase in building permits and starts usually occurs a few months
after a reduction in mortgage rates. Permits lead starts, but permits
are not required in all regions of the country, and the level of
permits therefore tends to be less than the level of starts over time.
The monthly national report is broken down by region: Northeast,
Midwest, South, and West. Briefing recommends analyzing the
regional data because they are subject to a high degree of volatility.
The high volatility can be attributed to weather changes and/or
natural disasters. For example, an unexpectedly high level of rain in
South could delay housing starts for the region.
Highlights
* New housing starts declined 5.9% m/m in February to 575,000.
* The consensus estimate called for starts to fall slightly more to
570,000.
* Building permits declined from 622,000 permits to 612,000.
* The consensus estimate called for permits to fall to 601,000.
Key Factors
* In a somewhat surprising note, starts in January were revised up
from 591,000 to 611,000. We believed, along with many economists,
that home construction would wane as the fiscal and monetary
stimulus programs expire by June 2010. Homes constructed after
December would probably not come on-line until after the
expiration date, and the new homes would be subjected to
consumers who have less incentives to make a new purchase.
* The strength in the home sales numbers makes us wonder if
homebuilders believe the stimulus plans will be extended beyond
June 2010.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
---------------------------------------------------------------------------------------------
WEDNESDAY, FEB. 17
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 ET around the 16th of the month (data for one
month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing. Building
permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates. Permits lead starts, but
permits are not required in all regions of the country, and the level
of permits therefore tends to be less than the level of starts over
time.
Highlights
* Housing starts continued their up one month, down the next trend
as starts fell 4.0% from 580,000 in November to 557,000 in
December.
* The consensus expected starts to fall only 8,000 to 572,000.
* While we had predicted starts would fall significantly, we based
our forecast on continued volatility in the multi-family sector.
* However, this was not the case as multi-family starts actually
increased from 90,000 starts in November to 101,000 in December.
* The drop in starts was completely attributed to a lack of single-
family construction.
* Single-family home starts fell 6.9% from 490,000 in November to
456,000.
* In contrast, building permits increased 10.9% from November's
589,000 level to 653,000.
* The jump in permits was due to increased demand in both the
single and multi-family sectors. Single family permits increased
8.3% to 508,000 while multi-family permits rose 20.8% to 145,000.
Key Factors
* It seems builders are well aware of the pitfalls of starting new
construction given that the latest increases in existing and new
home sales were propped up by government support.
* Since new homes constructed today would not come onto the
market until after the government stimulus expires, it makes sense
that builders would hold off on beginning new single-family homes
until they are sure demand has stabilized.
* The increase in permits does not necessarily mean that housing
starts will also increase in the near future. Builders often get
permits well in advance of construction. If the market does not
rebound ,they will let the permits expire without starting a new
home.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgage seems to have helped, and starts have begun to stabilize.
______________________________________________________
Wednesday, January 20, 2010
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 a.m. Eastern around the 16th of the month
(data for one month prior).
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing.
Building permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates.
Permits lead starts, but permits are not required in all regions of the
country, and the level of permits therefore tends to be less than the
level of starts over time.
Highlights
* Housing starts jumped 8.9% in November from 527,000 to 574,000.
That was in-line with the median estimate.
* In November, multi-family starts rebounded and grew 67% as
92,000 multi-family units were started.
* Single-family units rose from 472,000 in October to 482,000 in
November.
* Building permits increased 6.0% to 584,000 as single-family
permits rose 5.3% to 473,000 units and multi-family permits
increased 8.8% to 111,000 units.
* Housing completions rose 8.7% to 810,000. The lackluster number
of starts over the last few months will slowly drain the number of
completions.
Key Factors
* The rise in starts came in the face of declining sentiment among
homebuilders.
* In fact, the main reason for the increase was due to the movement
back to equilibrium in multi-family construction.
* Over the previous six months, multi-family starts averaged 96,000,
including a drop to 55,000 in October.
* Without the reversion back to the mean in multi-family starts, total
housing starts increased only 2.1%.
* After briefly breaking out above 500,000 in July and September,
new single-family starts seem stuck at their current level.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgages seems to have helped, and starts have begun to
stabilize.
--------------------------------------------------------------------------------------------------
Wednesday, December 23, 2009
10 a.m. New Home Sales
* Importance (A-F): This release merits a C-plus.
* Source: The Census Bureau of the Department of Commerce.
* Release Time: 10:00 ET around the last business day of the month
(data for month prior).
* Raw Data Available At: http://www.census.gov/const/newressales.
The report indicates the level of new privately owned one-family
houses sold and for sale. New home sales usually have a lagged
reaction to changing mortgage rates. They also tend to be stronger
early in the business cycle when pent-up demand is strong, and
they fade later in the cycle as the demand for housing is sated.
In addition to home sales, the market monitors the number of
homes for sale relative to the current sales pace. As this inventory
measure falls (rises), housing starts tend to rise (fall). Finally, the
median home price provides an indication of inflation in the
housing sector, though only year/year changes provide any
meaningful information.
Highlights
* New home sales rose 6.2% in October to 430,000. The consensus
expected new sales to remain at about the same as level as
September, 404,000.
* The median home price rose from $210,700 to $212,200 while the
average price declined from $284,600 to $261,100 in October.
Key Factors
* The large increase in new home sales should not have been
unexpected.
* For the past several months, existing home sales have surged as
new homebuyers have rushed into the marketplace in order to beat
the original deadline for the first-time homebuyers tax credit.
* Increases in new home sales have generally lagged the jump in
existing home sales and last month's sales unexpectedly declined
from 415,000 to 405,000. The consensus took the decline as a sign
that new homebuyers were not interested or able to afford a brand
new home and instead were settling for cheaper existing homes.
* Fortunately for new homebuilders, this was not necessarily true.
The distribution in price level between September and October was
very comparable and was skewed heavily toward less expensive
homes. This suggests that first-time homebuyers did make up a
significant portion of the new homes sold.
Big Picture
* Since the deadline for the first-time homebuyer tax credit was
extended until April 2010, we expect consumers to feel less rushed
into buying a home. Given that interest rates are expected to remain
near the zero-bound, there is less of an incentive to buy a home
before April and new home sales should moderate until the middle
of next year.
__________________________________________
WEDNESDAY, DEC. 16, 2009
8:30 a.m. Housing Starts and Building Permits
* Importance (A-F): This release merits a B-.
* Source: The Census Bureau of the Department of Commerce
* Release Time: 8:30 a.m. Eastern around the 16th of the month
(data for one month prior)
* Raw Data Available At: http://www.census.
gov/const/www/newresconstindex.html
Housing Starts are a measure of the number of residential units on
which construction is begun each month. A start in construction is
defined as the beginning of excavation of the foundation for the
building and is comprised primarily of residential housing.
Building permits are permits taken out in order to allow excavation.
An increase in building permits and starts usually occurs a few
months after a reduction in mortgage rates. Permits lead starts, but
permits are not required in all regions of the country, and the level
of permits therefore tends to be less than the level of starts over
time.
Highlights
* The talk that housing starts were stabilizing hit a snag in October
as new housing starts plummeted 10.6% to 529,000 units from
592,000. The consensus forecasted an increase in starts to 600,000.
* The details in the data don't look pretty.
* Single family starts fell 6.8% to 476,000 and is at its lowest level
since May.
* Multi-family starts fell a whopping 34.5% as only 53,000 new units
were started. Multi-family starts have never been this low since the
index was created in 1959.
* Building permits were higher than housing starts, but still declined
4.0% to 552,000. Not all permits are used to build a house and the
drop from September could be seen as an indicator that starts in
November could continue to decline.
* Total homes currently under construction fell 3.4% from its
previous historical low of 580,000 in September to 560,000 units in
October.
* Housing completions increased 1.9% to 740,000 units.
Key Factors
* It is difficult to analyze this month's data. On one hand, it's easy to
state that builders realized that the housing market continues to be
oversaturated with excess supply and builders are again making
drastic cutbacks. However, while single-family starts declined a
substantial amount, the levels are still over 100,000 higher than they
were at January's lows. If builders truly wanted to pull back from
the market, it would be expected that single-family starts would fall
by a much-greater percentage.
* It could be that builders were worried about the possible end to
the first-time homebuyers tax credit. Without the additional stimulus
money, many potential buyers would be priced out of the market. In
October there was still a hot debate in Congress on whether or not
to extend the credit. Even though it eventually passed, builders may
have held up on new starts until they got a better understanding of
what was going to happen on the fiscal side.
* It's tougher to grasp why multi-family units fell to new historic
lows. All economic fundamentals suggest heightened demand for
rental units over the next several years, which would obviously act
as an incentive for building multi-family properties. However, as
more single-family homes enter foreclosure, these homes are
becoming very attractive to investors to be used as rental
properties. Many families would prefer to live in a single family
home rather than an apartment building.
* The big question now is: Where do starts go from here? At the
beginning of the year, we thought housing starts would stay
around 500,000 through the middle of 2010. Incentives through
fiscal policy and quantitative easing propped up the real estate
market and helped push starts to between 580,000 and 590,000
units. If the decline in October was due to uncertainty regarding the
end date of the first-time homebuyer tax credit, then starts should
rebound back to the 580,000 to 590,000 unit range. If the decline is
due to oversaturation in the market, starts could fall precipitously
back to 500,000 units.
Big Picture
* Housing starts are at extremely low levels and the outlook is not
likely to improve any time soon due to high levels of inventories of
unsold new homes. An uptrend in construction will require an
improvement in employment and income, and then take some time
as inventories need to be reduced. Government action to boost
mortgages seems to have helped, and starts have begun to
stabilize.
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