Housing Starts And Building Permits Both Exceed Expectations

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Tuesday morning's report on Housing Starts and Building Permits for the month of June both came in stronger than expected. Housing Starts came in at a seasonally annualized rate of 1.189 mln compared to estimates for an increase of 1.165 mln. In the case of Building Permits, June saw an increase of 1.153 mln, which was just slightly ahead of consensus expectations of 1.150 mln.

The table below breaks down this month's report by the size of the unit as well as regions. In the case of unit sizes, both single-family and multi-family saw similar growth. As shown in the top line, overall Housing Starts ticked down 2% on a y/y basis in June.

While that would seem to indicate a slowdown, all of the weakness was in multi-family units, which are down 22%. Single-family units, on the other hand, are actually up 13.4%. On a regional basis, Housing Starts in the Northeast surged 46.3%, but are still down 47.8% y/y. The fact that there is such a wide disparity between the y/y and m/m numbers shows just how volatile this series is.

The 22% decline in multi-family units is especially notable given that it marks the largest y/y decline in that series in over six years. Part of the reason for the decline is that leading up to last June, there was a rush to get projects started due to the expiration of a tax credit on multi-family units in New York, so the recent decline is a bit of a giveback.

We would be more concerned if there were similar declines in single-family units, but as shown in the second chart, that is something we clearly aren't seeing at this point.