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Housing Starts: Modest Decline, Well Above Expectations

March 18, 2020

Bottom Line: Housing starts fell modestly in February but were stronger than expected and revised higher for January. Single-family starts moved higher amid lower interest rates as multifamily starts pulled back after two very strong months. The three-month average was1608k, moderately above the 6-month average of 1469k, suggesting the housing market trend was gaining momentum ahead of the Covid-19 pandemic. Building permits declined by 5.5% and, while volatile, suggest weakness in the coming months. Single-family permits rose slightly while multi-family permits fell sharply. Anecdotally construction continues, albeit more selectively, even in regions with shelter-in-place orders. However, new construction projects have likely been delayed and permitting activity has likely come to a near halt in many parts of the country.

Housing Starts FELL by 1.5% in February to 1599k, compared with market expectations for a decline to 1500k.

Meanwhile, the prior month was revised moderately higher from 1,567k to 1,624k. Housing starts are now 39.2% ABOVE their year-ago level. However, they are still a sharp 29.7% BELOW their January 2006 peak.
Single-Family Housing Starts ROSE by 6.7% to 1072k. Single-family housing starts are 35.4% ABOVE their year-ago level but still 41.2% BELOW their January 2006 peak.

Multifamily Housing Starts FELL by 14.9% to 527k. Multifamily starts are now 47.6% ABOVE their year-ago level.

Article by Contingent Macro Advisors