Need To Know News

July Housing Starts at 965k, were down 11% from the upwardly revised June figure of 1.84mln (up 18K) but 5k over the consensus estimat of 960k. Year on Year, Starts are down 29.6%. Housing Starts are at the lowest level since March 1991.

July Building Permits, at 937k, a drop of 17% from the upwardly revised 1.138mln (up47k) but below the expected 970k level. Year on year, Permits are down 32.4%.

Single Family Starts, at 641k were 2.9% below the upwardly revised 660k recoreded in June. Single Family Permits were 584k, a 5.2% drop from the upwardly revised June figure of 616k (up 3k). Single Family Starts are at the lowest level since January 1991. Single Family Permits are at the lowest level since Aug of 1982 and Completions are at the lowest level since March 1983.

Housing Completions come in at 1.035mln, a drop of 8.7% on a month on month basis and 31.7% below the July 2007 level.

Total U.S. housing units under construction was 955k in July; 491k Single Family units were under construction, the lowest level since Sept 1992.

Multi-Family Units Under Construction (NYC effect) is at the highest level since December 1986 at 440k. Single Family Northeast units at 59k, is a new record low.

June Housing Starts surged to 1.066mln, a 9.1% increase over the May data. June Building Permits, normally thought of as a forerunner to Starts, were up 11.6%. The surge in these data is very nearly all attributable to rule changes for permitting in New York City. The rush to get in under the implementation deadline drove June’s gains. Indeed, if not for the New York City rush, June would have recorded a 4% drop in Starts and only a 0.7% increase in Permits.

July Starts are expected at 960k and Permits are expected at 970k - a sharp return to the downtrend that has gripped the market since the high of 2.273mln Starts in January of 06. The June data was clearly indicative of urban building starts with the 5 units or more Starts jumping from 278k to 400k. Single Family Starts fell 36k, on pace with the 37k drop per month seen since June 2007.

Of interest in the day’s report will be the total number of Homes Under Construction; the June data, at 965k, was the lowest level since September 1998. Single Family Homes Under Construction, at 507k, was the lowest level since April 1993. Homes Under Construction has been dropping at an average rate of about 15k per month since June 2007. Back-of-the-envelope calculation brings these data to 492k.

If no further distortions occur, expect that Starts and Permits will go back to trend with a muted market reaction.

Housing starts in June posted an unexpected rebound, jumping 9.1 percent to an annualized 1.066 million unit pace and following a 2.7 percent decline in May. However, strength was lopsided - mainly in New York City and based on a one-time change in regulations. The June rebound was led by a 42.5 percent monthly surge in multifamily starts as single-family starts fell 5.3 percent. The surge in multifamily starts reflected the enactment of more restrictive building codes in New York City effective July 1, 2008 which created a rush to get permits before that date which in turn boosted starts. For July, there will almost certainly be a sizeable drop in multifamily and overall starts as starts in New York City fall back to probably even lower than pre-June levels (starts there probably were accelerated by more than one month). Markets should focus on the single-family component for now.

Housing starts Consensus Forecast for July 08: 0.950 million-unit rate
Range: 0.890 million to 1.065 million-unit rate

For all the information concerning Housing Starts please click on this graph.

June Housing Starts surged to 1.066mln, a 9.1% increase over the May data. June Building Permits, normally thought of as a forerunner to Starts, were up 11.6%. The surge in these data is very nearly all attributable to rule changes for permitting in New York City. The rush to get in under the implementation deadline drove June’s gains. Indeed, if not for the New York City rush, June would have recorded a 4% drop in Starts and only a 0.7% increase in Permits.

July Starts are expected at 960k and Permits are expected at 970k - a sharp return to the downtrend that has gripped the market since the high of 2.273mln Starts in January of 06. The June data was clearly indicative of urban building starts with the 5 units or more Starts jumping from 278k to 400k. Single Family Starts fell 36k, on pace with the 37k drop per month seen since June 2007.

Of interest in the tomorrow’s report will be the total number of Homes Under Construction; the June data, at 965k, was the lowest level since September 1998. Single Family Homes Under Construction, at 507k, was the lowest level since April 1993. Homes Under Construction has been dropping at an average rate of about 15k per month since June 2007. Back-of-the-envelope calculation brings these data to 492k tomorrow.

If no further distortions occur, expect that Starts and Permits will go back to trend with a muted market reaction.

The moon-shot in June Housing Starts and Buildings Permits falls to earth rather quickly. Commerce reports Permits in the Northeast at 237,000 for June. The average number of Northeast Permits over the past 12 months is 132,250 on a seasonally adjusted basis, so these data are astounding at best and misleading at worst.

Indeed, the Northeast number accounts for more than 25% of all permits reported in June. On a seasonally adjusted basis, permits increased 11.6%, but if the Northeast is excluded from the data, they were up only 0.7%.

Housing Starts are “ratio adjusted” to the permits, so a rise in permits has a direct affect on Starts. On a seasonally adjusted basis the Northeast had 126k starts, a 52.9% y-o-y increase, the highest level since 1997 - sort of.

The June Housing Starts and Building Permits data are skewed by Permits, which are skewed by a change in NY City permitting law and by seasonal factors. There should be no expectation that the housing market is on the mend.

June Housing Starts surged 9.1%, well above expectations and an upwardly revised (977k) May figure but 26.9% below June 2007’s revised 1.458mln units. Single Family Starts fell 5.3% to 647k and buildings with 5 plus units came in at 400k.

June Building Permits skyrocketed to 1.091mln, an 11.6% gain over May’s upwardly revised 978k figure but down 23.9% from June 2007’s revised 1.433mln level.
Single Family Permits were 613k, a drop of 3.5% from May and Permits for buildings with 5-plus units came in at 466k.

June Housing Completions were 1.167mln, up 1.2% from May’s 1.153mln but 21.7% below last June’s 1.491mln units.

The Northeast, specifically NY City, saw a surge in Permits due to rule changes. But for those changes, Permits were up by 0.7% and Starts were down 4%.

Total Homes Under Construction came in at 965k, the lowest level since September 1998. Single Family Homes under Construction, at 507k, was the lowest level since April 1993.

The euphoria from these data should be short-lived but powerful.

June Housing Starts are expected to come in at 960k vs. 975k last time. 960k would be the lowest level since Mar-91, when Starts fell to 921k. June Building Permits are expected to fall again as well, to 965k from an upwardly revised 978k pace in May. As recently as May Housing Starts were up 2% after dropping 10.7% the previous month.

The slowdown in Starts appears to be diminishing but the threat to Fannie Mae and Freddie Mac, added to the disappearance of non-conforming loans, raises the specter of a worsening of housing data in general — starting with sales and supply, and backing up to Starts and Permits. In short, financial sector problems have potential to create a negative feedback loop through the housing market.

June Housing Starts are expected to come in at 960k vs. 975k last time. 960k would be the lowest level since Mar-91, when Starts fell to 921k. June Building Permits are expected to fall again as well, to 965k from an upwardly revised 978k pace in May. As recently as May Housing Starts were up 2% after dropping 10.7% the previous month.

The slowdown in Starts appears to be diminishing but the threat to Fannie Mae and Freddie Mac, added to the disappearance of non-conforming loans, raises the specter of a worsening of housing data in general — starting with sales and supply, and backing up to Starts and Permits. In short, financial sector problems have potential to create a negative feedback loop through the housing market.

Housing Starts fell 3.3% to a 975k annual rate in May, below expectations of 980k and below April’s upward blip of 1.008mln (which was downwardly revised from the 1.032mln originally reported).

Building Permits were authorized at a 969k annual rate, above consensus estimates but down 1.3% from the 982k permits reported last month (initially reported as 978k).

Housing starts were down 32.1% from May-07, while Permits were 36.3% lower on an annual basis.

Single-family homes were started at 674k annual pace, the lowest since Jan-91, while single-family permits were issued at a 623k rate. Single-family permits in the Northeast were 58k, the lowest on record.

Multi-family units, which have been less susceptible to the housing meltdown, were started at a 280k pace, down from April’s 313k rate. Multi-family permits were 314k.

Meanwhile, housing completions rose 11.6% to 1.132mln units after registering 1.014mln in April. Housing completions were still 27% below year-ago levels.