Econoday Report: Housing Starts July 17, 2009

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Housing Starts

Released on 7/17/2009 8:30:00 AM For June, 2009

	Prior	Consensus	Consensus Range	Actual
Starts - Level - SAAR	0.532 M	0.530 M	0.500 M to 0.550 M	0.582 M
Permits - Level - SAAR	0.518 M			0.563 M

Highlights
Housing starts in June came in unexpectedly strong, continuing a robust gain the month before and indicating that we may have passed the bottom in housing. Starts increased 3.6 percent, following a huge 17.3 percent spike in May. The June pace of 0.582 million units annualized was down 46.0 percent year-on-year and came in well above the market forecast for 0.530 million units. The boost in June was led by the single-family component which advanced 14.4 percent after rising 5.9 percent the month before. However, the multifamily component gave back some of May's surge, falling 25.8 percent after a very strong 65.9 percent boost the month before.

By region, the June gain in starts was led by a monthly 33.3 percent jump in the Midwest, followed by a 28.6 percent boost in the Northeast. The West and South declined 14.8 percent and 1.4 percent, respectively.

Importantly, permits posted a healthy increase, indicating that the strength in starts over the last two months may not be that much weather related. Permits came in with an 8.7 percent increase in June, following a moderate 4.0 percent rise in May. The June pace for permits at 0.563 million units annualized was down 52.0 percent on a year-ago basis.

Today's report shows unexpected improvement in housing and we have another indicator suggesting that we are getting closer to the end of the overall recession. Equities should like the numbers and bond yields should firm.

Market Consensus Before Announcement
Housing starts rebounded in May 17.2 percent, following a sharp 12.9 percent drop the month before. The comeback was led by the multifamily component which posted a 61.7 percent gain after falling 49.4 percent in April. Nonetheless, the single-family component gained 7.5 percent, following a 3.3 percent rise the month before. Don't look for much improvement in June, however, as supply of single-family homes is still quite high and apartment vacancy rates have been rising.

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