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 6/17/08 For May 2008 | |||||||||||||||||||||||
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Highlights
Housing starts in May resumed a downward slide. Starts fell 3.3 percent, following a 2.0 percent rebound in April. The May pace of 0.975 million units annualized was down 32.1 percent year-on-year and was a little worse than the consensus forecast for 0.985 million units. The May decline was led by an 8.0 percent drop in multifamily starts as single-family starts fell another 1.0 percent. Permits also decreased - by 1.3 percent in May, following a 5.4 percent pick up in April. May's 0.969 million unit pace for permits was down 36.3 percent year-on-year.
By region, the decline starts were led by a monthly 25.0 percent drop in the Midwest with the West and South also showing decreases of 10.3 percent and 4.4 percent, respectively. In the Northeast, starts rebounded 61.5 percent.
Today's numbers are close to expectations and should have little impact on the markets alone. Housing remains in depression. But a red hot headline PPI came out at the same time and markets will be turning attention to this morning's release of industrial production numbers.
Housing starts in April rebounded unexpectedly but the improvement may have reflected the fact that it is more difficult to get into single-family housing or at least merely shows volatility in multifamily starts. Starts rebounded 8.2 percent, following a sharp 13.8 percent drop in March. The April boost was led by a 36.0 percent rebound in multifamily starts as single-family starts slipped another 1.7 percent. The bottom line is that the single-family component is still in recession and with the continued heavy supply of unsold homes, there is little reason to look for recovery in that component.
Housing starts Consensus Forecast for May 08: 0.985 million-unit rate
Range: 0.900 million to 1.050 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. |
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