Starts and permits both came in well below consensus estimates, with revisions negative.
Lower mortgage rates have not helped new home construction. Both starts and permits are not only well below the Econoday consensus range, but also lower than the lowest estimates.
Housing starts came in far below expectations in March, at a 1.139 million annual rate which is nearly 30,000 below Econoday's consensus range. And permits aren't any better, at a 1.269 million rate and nearly 20,000 below the low estimate.
The trend is clearly downward with starts the weakest since May 2017 and permits the weakest since August last year. Year-on-year rates are minus 14.2 percent for starts and minus 7.8 percent for permits. Goods news in the report is scarce but does include a welcome 11.9 percent monthly jump in single-family completions at a 938,000 rate for a new home sales market that needs fresh supply.
But another key reading, permits for single-family homes, fell 1.1 percent in March and are down 5.1 percent year-on-year. Low mortgage rates may be helping purchase applications but have yet to trigger much response from home builders.
However strong the jobs market may be, residential investment was the consistent tail ender in last year's GPD statistics and doesn't look like it will be improving in the first quarter. Regional data show a March uptick for starts and permits in the West, where home prices have completely flattened, though year-on-year rates here remain deeply negative. All regions in fact are in the negative year-on-year columns whether for starts or permits.
New Residential Construction
Let's tune into the New Residential Construction report for more details.
- Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,269,000. This is 1.7 percent below the revised February rate of 1,291,000 and is 7.8 percent below the March 2018 rate of 1,377,000.
- This is 1.7 percent below the revised February rate of 1,291,000 and is 7.8 percent below the March 2018 rate of 1,377,000.
- Single‐family authorizations in March were at a rate of 808,000; this is 1.1 percent below the revised February figure of 817,000. Authorizations of units in buildings with five units or more were at a rate of 425,000 in March.
Housing Starts
- Privately‐owned housing starts in March were at a seasonally adjusted annual rate of 1,139,000. This is 0.3 percent below the revised February estimate of 1,142,000 and is 14.2 percent below the March 2018 rate of 1,327,000.
- Single‐family housing starts in March were at a rate of 785,000; this is 0.4 percent below the revised February figure of 788,000. The March rate for units in buildings with five units or more was 337,000.
Housing Completions
- Privately‐owned housing completions in March were at a seasonally adjusted annual rate of 1,313,000.
- This is 1.9 percent below the revised February estimate of 1,338,000, but is 6.8 percent above the March 2018 rate of 1,229,000.
- Single‐family housing completions in March were at a rate of 938,000; this is 11.9 percent above the revised February rate of 838,000. The March rate for units in buildings with five units or more was 364,000.
Starts, Permits, Completions
Synopsis
- Compared to a year ago, starts are down 14.2%, permits are down 7.8%, and completions are up 6.8%.
- Compared to February, starts are down 0.3%, permits are down 1.7%, and completions are up1.9%
Numbers are volatile, but the data strongly suggests that builders are finishing homes at close to the peak rate, but not starting new ones.
This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.
Editors’ Picks
![EUR/USD stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
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