Bloomberg Econoday offers a mostly optimistic outlook.
Last month’s starts and permits data were one of the big disappointments for the housing sector in contrast to today’s report for April which is one of the most positive reports so far this year. Starts rose 5.7 percent on the month to a higher-than-expected annual rate of 1.235 million while permits gained 0.6 percent to 1.296 million which is slightly higher than expected. But the battle is still uphill for housing as year-on-year comparisons show: at minus 2.5 percent for starts and minus 5.0 percent for permits.
Yet April’s improvement in starts is convincing, up 4.7 percent in the month for multi-family units to a 381,000 annual rate and up 6.2 percent for single-family homes to 854,000. These results, especially the latter, mark an auspicious opening to second-quarter residential investment which in the prior five quarters pulled down GDP.
Permits, however, are mixed with single-family homes down 4.2 percent in April to a 782,000 rate but multi-family permits up a very sharp 8.9 percent to 514,000. Total permits in the West, where housing has been flattening dramatically, offer especially good news with a second strong monthly showing of plus 5.3 percent to a 339,000 rate which is still down 2.3 percent year-on-year. And permits in the South, the largest region, keep falling, down 1.2 percent for 10.7 percent annual contraction.
Low mortgage rates have yet to trigger much response from home builders on the permit side though improvement underway in home sales and gains for mortgage applications are positives for the demand side. Last year’s Spring housing season proved perhaps the greatest disappointment of the 2018 economy but the 2019 season looks more and more positive.
Housing Starts 1959-Present
Housing starts don’t exactly look strong. Population-adjusted they would look much worse.
Mike “Mish” Shedlock
Spring pop, here in the midwest it seems like gangbusters with multi-family units. Still very cheap interest, and my friends who are selling homes in the 200-300k range they go under contract immediately. My theory is so many people are working now the banks have more lendees, venture capitalists own more realtor companies and are just waiting in the wing, they know how it’s done.
Housing starts data was not strong. Permits data is even weaker, especially considering the Year-over-Year comparison with rates. 30-Yr fixed was a full 33 basis points lower in April 2019 yet builders were in no hurry to pull permits.
They are cautiously managing inventory, contrary to their supposedly improved ‘CONfidence’.
Spring is sprung.