Housing Starts Plunge 6.8%, Just as Sentiment is Peaking...

Mish Shedlock |

Unless housing starts data is another one-time affair, and it could be given the volatile nature of housing starts, this recovery is nearly over just as sentiment is peaking.

Econoday notes a 6.8% decline in housing starts for March to 1.215 million units seasonally adjusted annualized (SAAR).

The reported dip is vs an upward revision in February from 1.288 million SAAR to 1.303 million SAAR. Thus, the effective dip vs the as-reported number last month is an oversized 5.7%:



The first quarter ended with a thud for housing starts which fell a very steep 6.8 percent to a 1.215 million annualized rate which is the weakest since November. Posting similar declines were both single-family homes, at an 821,000 pace, and multi-family, at 394,000. But both components do show nearly double-digit year-on-year growth though quarter-to-quarter rates are only slightly positive.

Permits appear to be the positive offset in this report, up 3.6 percent in the month for a 1.260 million rate that hits Econoday’s high forecast. But strength is entirely on the multi-family side, up 14 percent to a 437,000 rate, while single-family homes, which have more price punch, actually fell 1.1 percent to 823,000.
March data are often difficult when seasonal factors, including heavy weather, are often at play. But the weakness in starts and strength in permits do point to a possible and favorable theme for the first-half economy in general: weakness in the first quarter followed by a sizable rebound in the second. And a 1.5 percent gain in homes permitted but not started does hint at a coming rebound.

Recent History

Optimism among home builders has been very strong and acceleration is beginning to appear in actual residential construction.

Incessant Econoday Cheerleading

Econoday’s recent history comment about “acceleration” is amusing.

Those looking for a positive interpretation to any economic report need only turn to Econoday. If Econoday cannot find something positive to say, no one can. Today meets the typical pattern as Econoday looks forward to that famed second-half recovery.

Plodding Along

If one looks at actual trends, not much has changed as this Census Bureau chart shows.

There is no reason to expect second-half acceleration. However, a one-month decline does not constitute a downward trend either.

My opening statement remains accurate, but with weakening economic data in numerous place, especially retail sales, worrying signs have picked up.

Finally, and in contrast to Econoday, this report does not change my economic forecast for first-quarter GDP, but it does lower my expectations for second-quarter GDP.

My first-quarter GDP forecast remains 0.4%.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Radient Technologies Inc.

Radient Technologies Inc is engaged in research, development and commercialization of environmentally responsible technology for the extraction, isolation and purification of soluble products from a wide range of materials using…

Private Markets

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…