Econoday Report: Housing Starts June 16, 2009

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Housing Starts

Released on 6/16/2009 8:30:00 AM For May, 2009

	Prior	Consensus	Consensus Range	Actual
Starts - Level - SAAR	0.458 M	0.500 M	0.440 M to 0.550 M	0.532 M
Permits - Level - SAAR	0.494 M			0.518 M

Highlights
Housing starts in May showed surprising strength-even in the single-family component. Starts rebounded 17.2 percent, following sharp 12.9 percent drop the month before. The May pace of 0.532 million units annualized was down 45.2 percent year-on-year and was above the market projection for 0.500 million units. The rebound in May was led by the multifamily component which posted a 61.7 percent comeback after falling 49.4 percent in April. But the single-family component gained 7.5 percent, following a 3.3 percent rise the month before.

By region, the rebound in starts was led by a monthly 28.6 percent surge in the West. Other regions also saw gains with the South up 16.8 percent, the Midwest rising 11.1 percent, and the Midwest gaining 2.0 percent.

Permits also made a comeback, gaining 4.0 percent in May after slipping 2.5 percent the month before. The May permit pace of 0.518 million units annualized was down 47.0 percent on a year-ago basis.

Markets had expected some rebound in the multifamily component in starts but the increase was notably more than expected. But the really good news was the sizeable rise in the single-family component. This is good news for the green shoots advocates and should provide lift to equities. But before equity markets open in the U.S., we have to get past the industrial production release at 9:15 a.m. ET.

Market Consensus Before Announcement
Housing starts in April fell another 12.8 percent to a pace of 0.458 million units annualized-a new record low for a series going back to 1959. The April pace of 0.458 million units annualized was down 54.2 percent year-on-year. April's decrease was led by the multifamily component which plunged 46.1 percent while single-family starts edged up 2.8 percent. Looking ahead, we may see a rebound in multifamily starts pulling up the headline number. But single-family starts are still constrained by heavy supply of unsold homes-which stood at 10.1 months in April for newly constructed homes.

Definition
A housing start is registered at the start of construction of a new building intended primarily as a residential building. The start of construction is defined as the beginning of excavation of the foundation for the building. Why Investors Care

Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes five months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a five month moving average.

Data Source: Haver Analytics

2009 Release Schedule

Released On: 1/22 2/18 3/17 4/16 5/19 6/16 7/17 8/18 9/17 10/20 11/18 12/16

Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov