Housing Starts: Surprising Decline
April 19, 2016
Bottom Line: Housing starts slipped to their lowest level in a year. The three month average is now 1133k, just slightly below the 6-month average of 1134k. While this data is concerning for the trend, we should note that there has been a slight tendency for weak March prints and stronger April prints, despite seasonally adjusted data. Multifamily starts slipped, and year-over-year are now lower. Single-family home starts dropped moderately. Building permits declined 7.7% and, while volatile, could suggest weakness in coming months. Single-family permits fell slightly while multi-family permits fell sharply. Overall, the progress in the housing market is still modestly positive amid substantially more volatile data and a concering trend in multifamily starts. Housing Starts FELL by 8.8% in March to 1089k, compared with market expectations for a decline to 1150k. Meanwhile, the prior month was revised modestly higher from 1,178k to 1,194k. Housing starts have still been slowly climbing, albeit amid substantial volatility, since reaching their cyclical nadir in April 2009 and are now 14.2% ABOVE their year ago level. However, they are still a sharp 52.1% BELOW their January 2006 peak. Single Family Housing Starts FELL by 9.2% to 764k. Single family housing starts are now 22.6% ABOVE their year ago level but are still a stunning 58.1% BELOW their January 2006 peak. Multifamily Housing Starts FELL by 7.9% to 325k, their lowest level in a year. The trend in Multifamily starts is now turning lower, amid substantial volatility, with starts in this sector now 1.8% BELOW their year ago level. Housing starts were mixed across regions. Housing starts in the Northeast saw sharp gains, up 61.3% but still 15.6% below their 12-month average. Starts in Midwest saw sharp declines, down 25.4% and 6.5% below their 12-month average.
Article by contingentmacro