Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Housing Starts Declined 0.9% in June
Posted Under: Data Watch • Home Starts

 

Implications:  Don't get too hung up on the headline decline in housing starts in June; the details in the report continue to signal life in home building.  In fact, despite back-to-back monthly declines, builders started homes in Q2 at the second fastest pace for any quarter since 2007.  And that was behind only Q1 2018, during the aftermath of Hurricanes Harvey and Irma, when building surged temporarily to replace homes destroyed by the storms.  After that surge, the pace of home building fell three quarters in a row, but it now looks like a rebound is underway, with the first two quarters of 2019 posting gains.  In other words, the general rising trend in home building dating back to 2011 remains intact.  Note that all of the weakness in June came from the more volatile multi-family sector, while single-family starts rose 3.5%.  On average, each single-family home contributes to GDP about twice the amount of a multi-family unit, so a sustained shift back towards single-family construction would be a boon for economic growth.  That said, developers continue to face challenges from the labor market, where job openings in construction remain at a record high.  When the National Association of Home Builders released their survey of top challenges for builders in 2019 at the beginning of the year, concerns related to the cost and availability of labor were the most prevalent, with 82% of developers surveyed citing them as their biggest challenge in the year ahead.  Despite the headwinds from labor, fundamentals for potential buyers have improved markedly over the past several months.  Mortgage rates have dropped roughly 100 basis points since the peak late last year, and wages are now growing near the fastest pace in a decade, boosting affordability.  The forward-looking data in today's report show that permits for new construction fell 6.1% in June.  However, this was entirely due to 16.8% decline in multi-family permits.  Meanwhile, single-family permits eked out a gain of 0.4%, the second gain in a row after seven straight months of declines.  Overall, our outlook on housing hasn't changed: we anticipate a rising trend in home building in the next few years.  Based on fundamentals – population growth and scrappage – the US needs about 1.5 million new housing units per year but hasn't built at that pace since 2006. 

Click here for PDF version 

Posted on Wednesday, July 17, 2019 @ 10:57 AM • Post Link Share: 
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.
 
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 advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.