Implications: Like farmers, homebuilders care about the weather. And, it's all about timing. June was wet, wet, wet. In fact, 18 states in the South and East had rain totals in June that ranked among their 10 wettest on record. When it's wet it's hard to move dirt and get foundations in the ground. That's why home starts fell 9.9% in June, dropping to the lowest level since August 2012. The vast majority of the decline (95%) was due to the very volatile multi-family sector. But single-family starts fell 0.8% as rain held them back. Nonetheless, single-family starts are still up 11.5% from a year ago. Once started, rain matters less, and despite the decline in starts, the total number of homes under construction have increased for 22 consecutive months. We expect this trend to continue, with housing starts rebounding sharply in July. Housing permits declined 7.5% in June, but this was all due to multi-family permits. So like housing starts, we also expect a sharp rebound in permits in July. Single-family permits were up 0.6% in June and up 16.1% in the past year. Based on population growth and "scrappage," housing starts will eventually rise to about 1.5 million units per year (probably by 2015). The bottom line is that no one should get worked up over every zig and zag in the data, especially when weather changes. Sometimes an indicator will surge up above the underlying growth trend or fall sharply with these moves reversed the following months.
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Posted on Wednesday, July 17, 2013 @ 10:03 AM
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