Housing starts measure initial construction of residential units (single-family and multi-family) each month. A rising (falling) trend points to gains (declines) in demand for furniture, home furnishings and appliances. Why Investors Care
| Released on 9/19/07 For Aug 2007 | |||||||||||||||||||||||
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Highlights
Housing starts fell 2.6 percent in August to a lower-than-expected 1.331 million unit rate, the lowest rate since June 1995. Permits fell more steeply, down 5.9 percent to a 1.307 million rate, also the lowest rate since June 1995. Year-on-year, housing starts are down 19.1 percent with permits down 24.5 percent. Starts and permits are being depressed by the swollen supply of houses on the market, at 9.6 months for existing homes in July and at 7.5 months for new homes.
Within starts, weakness was led by the single-family component which dropped another 7.1 percent, following a 7.3 percent fall in July. Multifamily starts rebounded 12.8 percent, following a 5.3 percent decrease the month before.
On a year-on-year basis, overall starts are down 19.1 percent in August, compared to down 21.7 percent in July.
Regionally, starts in August were weakest in the Northeast with a 37.7 percent drop, followed by the West with an 18.4 percent decline. Starts rose 11.4 percent in the South and 4.2 percent in the Midwest.
Within housing permits, single-family permits fell 8.1 percent while multifamily permits were unchanged.
On a year-on-year basis, overall permits were down 24.5 percent in August, compared to down 21.7 percent in July.
The August starts report clearly shows that housing still needs a boost and the Fed's interest rate cut will likely help some by making housing more affordable. Such improvement is still down the road as homebuilders are not going to boost construction until supply comes down. But at least supply will now likely come down faster and that is a positive.
Housing starts in July fell 6.1 percent, following a revised 2.1 percent rise in June. On a year-on-year basis, overall starts are down 20.9 percent in July, compared to down 19.2 percent in June. While we saw a recent positive for housing with a boost in mortgage applications, that improvement is far upstream and will have little impact on current housing construction. Starts continue to be weighed down by excessive supply in both new and existing homes on the market.
Housing starts Consensus Forecast for August 07: 1.36 million-unit rate
Range: 1.32 million to 1.40 million-unit rate
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Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes six months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a six month moving average. |
| 2007 Release Schedule | ||||||||||||||||||||||||||
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