The only important economic data released this morning is a report from the U.S. Census Bureau, which showed that privately-owned housing starts in June grew at a seasonally adjusted annual rate (SAAR) of 1.189 million units. That is a sharp 4.8 percent increase from May’s downward-revised print, the largest monthly gain since February, better than economists had expected, and perhaps a factor behind the recent spike in lumber futures. Single-family housing starts jumped last month (+4.4 percent) and multi-family units (rentals) rose by a healthy 1.6 percent. Regionally, total housing starts surged in the Northeast and the West in June, and declined in the Midwest and the South, although the single-family housing starts segment expanded in every region last month.
On a year-over basis, total housing starts were down 2.0 percent in June, the second annual decline in the past three months. Total building permits, a popular gauge of future construction activity, climbed in June (+1.5 percent to 1.153 million units) but still fell 13.6 percent over the past twelve months. This longer-term loss of momentum is likely due to a combination of land supply scarcity, still relatively tight credit standards, and as we learned yesterday, local delays in getting building permits approved. However, continued strength in the labor market (wage growth), accelerating Millennial household formation, and Federal Reserve officials’ renewed reluctance to raise interest rates should all remain supportive of U.S. home construction.
Sources: Econoday, Twitter, Bloomberg, ZH, U.S. Department of Commerce, FRBSLPost author: Charles Couch