Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Housing Starts Declined 5.5% in May
Supporting Image for Blog Post

 

Implications:  Housing starts came in much lower than the consensus expected in May, falling 5.5% to a 1.09 million annual rate.  Starts were below even the lowest forecast from any economics group.  However, this does not signal the end of the housing recovery; far from it.  Even though both single-family and multi-unit starts were responsible for the drop in May's headline number, in the past year single-family starts are still up 8.5% while multi-unit starts are down 23%.  The "mix" of construction has been generally shifting toward single-family building and this is a good sign for the overall economy.  When the housing recovery started, multi-family construction led the way. But the share of all housing starts that are multi-family appears to have peaked in 2015, when 35.7% of all starts were multi-family, the largest since the mid-1980s, when the last wave of Baby Boomers was growing up and moving to cities. In May, the multi-family share of starts fell to 27.3%.  The shift toward single-family is a positive sign for the economy because, on average, each single-family home contributes to GDP about twice the amount of a multi-family unit.  Based on population growth and "scrappage," housing starts should eventually rise to about 1.5 million units per year. In other words, much of the recovery in home building is still ahead of us.  The good news in today's report was that housing completions rose 5.6% in May and are now up 14.6% in the past year.  On top of this, the number of homes currently under construction peaked back in February and have been trending down since, signaling that recently builders have been focusing on finishing projects that are already underway before starting new ones.  Expect housing starts to rebound in the months ahead as more unfinished projects are completed.  In other recent housing news, the NAHB index, which measures sentiment among home builders fell to a still elevated 67 in June from 69 in May.  Expect further strength in the housing sector in the year ahead as more jobs, faster wage growth, and, for at least the time being, optimism about more market-friendly policies from a Trump Administration, continue to encourage both prospective home buyers and builders.           

Click here for PDF version 

Posted on Friday, June 16, 2017 @ 10:21 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Industrial Production was Unchanged in May
Fed Hikes Again, Sets Plan to Re-Normalize Balance Sheet
Retail Sales Declined 0.3% in May
The Consumer Price Index Declined 0.1% in May
The Producer Price Index was Unchanged in May
You Cannot Disprove a Negative
Less Loose
M2 and C&I Loan Growth
The ISM Non-Manufacturing Index Declined to 56.9 in May
Long Housing, Short Autos
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.