Housing Starts And Building Permits Miss By A Mile

by: Bespoke Investment Group

This morning's monthly data on Housing Starts and Building Permits showed widespread weakness in terms of the actual readings and relative to expectations. As shown above, starts missed expectations by 77K on a SAAR rate and declined 8.8% m/m. Building Permits missed expectations by an even wider amount (-114K) and fell 7.7% m/m.

Looking back at recent releases of these indicators, the magnitude of the miss in Housing Starts wasn't a huge outlier, but the miss in Building Permits was the largest since at least 2002. While some of the weakness in this month's report may have been the result of give-back after warm weather in the winter months allowed more projects to break ground earlier and prior data was revised higher, there is no other way to categorize today's report as being anything but weak.

Looking at the long range charts below, Housing Starts are still comfortably in the middle of the range they have been in since early 2015. For Building Permits, the trend is less positive. After making a lower high in November, this month's reading took out the prior low from September.

Click to enlarge

The table below shows the m/m and y/y change in Housing Starts and Building Permits by the size of the unit and on a regional basis. With the exception of the Northeast, every other sequential reading was negative in March. On a y/y basis, however, most readings are up. In the case of both starts and permits, the y/y readings for single-family units are up by double-digit rates while multi-family readings are both negative.