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.
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.
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%.