Starts Beat, Permits Miss

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Includes: IYR, REZ, XHB
by: Bespoke Investment Group

Friday morning’s housing data was a mixed bag with Housing Starts exceeding consensus expectations by a slim margin and Building Permits missing estimates by an even slimmer one. With regards to starts, the seasonally adjusted annualized rate (SAAR) came in at 1.164 mln units compared to expectations of 1.150 mln and last month’s reading of 1.1167 mln units. For Building Permits, the SAAR rate came in at 1.138 mln units compared to expectations of 1.145 mln units and last month’s reading of 1.130 mln units. From their peaks last June, Housing Starts are down 4% while Building permits are down 14.7%.

The table below breaks down this month’s report by type of unit and region (charts of the overall national levels are provided below). As shown in the table, with regards to the size of units, May’s numbers for starts were pretty muted with little in the way of swings. Regarding Building Permits, though, multi-family units were strong with a m/m gain of 5.9% compared to a 2.0% decline in single-family permits. These have been volatile readings lately, though, as evidenced by the y/y readings where single-family are up 4.8% and multi-family are down 28.1%. On a regional basis, the West region was the strongest for both starts and permits with m/m increases of 14.4% and 15.3%, respectively. Meanwhile, activity in the Northeast looks to be down sharply, but those numbers are a bit misleading as readings from a year ago were unusually high due to the expiration of tax breaks last summer.

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