Mixed Housing Data

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Includes: CLAW, HOML, HOMX, ITB, NAIL, PKB, XHB
by: Bespoke Investment Group

After big declines last month, housing data for the month of April (in terms of Housing Starts and Building Permits) showed a nice rebound. Relative to expectations, though, the data was mixed. As shown in the table above, Housing Starts exceeded expectations by 47K which was the biggest beat since last September's report. Building Permits, however, missed consensus expectations by 19K, marking the third straight weaker than expected report.

The table below breaks down this month's Housing Starts and Building Permits reports by size of unit and region. For both Starts and Permits, the rebound this month was driven by multi-family units, which rose 13.9% and 8.0%, respectively. On a y/y basis, though, multi-family starts are up over 16%, while permits are down 8.4%. As shown in the charts, multi-family permits are down sharply from their peak readings seen towards the middle of 2015. Part of this is due to some give back as multi-family units saw a surge ahead of the expiration of some tax breaks in New York, and hence the 23.5% y/y decline in northeast permits.

While Housing Starts and Building Permits tend to have some month to month volatility, overall momentum appears to be slowing somewhat. The chart below shows the 12-month moving average of both headline Housing Starts and Building Permits going back to 2000. Both moving averages declined modestly this month, with the drop in Permits being the largest since March 2011, and keep in mind that the two months of run-up ahead of the tax break expiration are still part of the 12-month moving average.