Wednesday, July 18, 2012

Building Permits & Housing Starts Beat Expectations

Housing numbers released this morning were positive, but we think the impact will be short lived as growth in construction and permits may be priced in.  In addition, other indicators such as the MBA mortgage application index show that demand for home purchase by individuals remains volatile.  We also note that with lack of enough job and wage growth, the better than expected housing permits and starts could be adding too much too fast to inventories.  XHB is down 1% this week.  It opened pretty much flat this morning.

Building Permits

  • June building permits print was 755K, below the 765K consensus.  However, the May figure was revised up by 4K to 784K.  Building permits were down 3.7% m/m, but up 19.3% Y/Y.
  • MDU (multi-dwelling units) permits for 5+ units declined 11.4% sequentially but were up 21.7% Y/Y. 
  • Single-family homes saw a slight sequential increase, 0.6%, and were up 19.7% Y/Y.
  • On a monthly basis, the Western region saw the biggest growth, 2.9%, while the biggest decline was in the South, -8.0%.  No growth was registered in the Northeast region.
  • Midwest monthly growth of single-family homes was less than total growth, -1.2% versus -0.8%, respectively.  The same can be said about the West, 1.8% versus 2.9%.  However, single-family homes in the South grew faster than total homes, 0.8% versus -8.0%, respectively.
  • All regions saw Y/Y growth, with the West leading the way with 30.4%.  Y/Y growth of single-family homes was higher than total growth in the Northeast and West, but lower in the South and Midwest.

Housing Starts

  • June housing starts came in at an annual rate of 760K, above the 743K consensus; up 6.9% sequentially and 23.6% Y/Y.  Previous month's number was revised up by 3K to 711K.
  • Sequentially, MDU starts outpaced single-family homes, 17.0% versus 4.7%, respectively.  The same can be said about Y/Y changes, 29.1% versus 21.7%. 
  • Total starts declined 7.3% and 4.2% m/m in the Midwest and South, respectively.  They increased 22.2% and 36.9% in the Northeast and West.
  • Single-family home starts monthly growth lagged behind total starts in the West, but the opposite can be said about the other regions.
  • Midwest saw a decline of 19.8% in total starts Y/Y, while starts grew in the other regions with the West leading the way at 63.4%. 
  • Single-family home starts Y/Y growth lagged behind total starts in the West and South; and grew faster than total starts in the remaining two regions.

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