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 8/19/08 For Jul 2008 | |||||||||||||||||||||||
| |||||||||||||||||||||||
Highlights
Housing starts in July fell sharply as expected after an artificial boost in the multifamily component in June. Starts fell 11.0 percent, following a 10.4 percent surge in June. The July pace of 0.965 million units annualized was down 29.6 percent year-on-year and beat the consensus expectation for 0.950 million units. The drop in starts was led by a 23.6 percent monthly falloff in multifamily starts, following a 41.3 percent spike in June. Single-family starts continued its downward spiral, falling 2.9 percent in the latest month, after declining 3.2 percent in June. July's level in starts was a return to more normal conditions after a change in building code in New York City - taking effect July 1 - led to a run on both permits and starts to grandfather in the less restrictive code.
By region, the drop in starts was led by a monthly 30.4 percent decline in the Northeast with the South and West also declining, both by 8.2 percent. The Midwest posted a 10.0 percent gain.
Permits also fell in July - by 17.7 percent, following a 16.4 percent surge in June. July's 0.937 million unit pace for permits was down 32.4 percent year-on-year.
Today's report shows housing continuing to decline but not as severely as suggested by July's monthly percentage. The point of focus should be the further gradual decline in the single-family component and residential construction has not hit bottom yet. The July numbers were close to expectations and should not have much impact on the markets.
Housing starts in June posted an unexpected rebound, jumping 9.1 percent to an annualized 1.066 million unit pace and following a 2.7 percent decline in May. However, strength was lopsided - mainly in New York City and based on a one-time change in regulations. The June rebound was led by a 42.5 percent monthly surge in multifamily starts as single-family starts fell 5.3 percent. The surge in multifamily starts reflected the enactment of more restrictive building codes in New York City effective July 1, 2008 which created a rush to get permits before that date which in turn boosted starts. For July, there will almost certainly be a sizeable drop in multifamily and overall starts as starts in New York City fall back to probably even lower than pre-June levels (starts there probably were accelerated by more than one month). Markets should focus on the single-family component for now.
Housing starts Consensus Forecast for July 08: 0.950 million-unit rate
Range: 0.890 million to 1.065 million-unit rate
![[Chart]](chart.gif)
|
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. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
|
powered by
![[Econoday]](../../../../../../../../../images/logo.gif){kind=logo}