17 Jun 2015
US housing to see a gradual improvement over the medium-term – Nomura
FXStreet (Barcelona) - North American Economists at Nomura, preview the US housing starts data release, noting that the below consensus print doesn’t signal a downward trend, and a choppy improvement might be seen over the medium-term.
Key Quotes
“The Census Bureau today reported that US housing starts declined by 11.1% in May to an annualized 1036k—below expectations (Nomura: 1050k, Consensus: 1090k)—from a revised 1165k in April (previously reported as 1135k).”
“We expected a sizable decline in starts in May, because we largely attribute the strength in starts in April to a rebound from the weather-induced weakness in construction activity in February and March when housing starts dipped below 960k. Therefore, we do not believe the decline in starts in May is indicative of a new downward direction but a return of starts to their underlying trend.”
“We continue to expect construction activity to improve gradually as housing fundamentals become more supportive.“
“Building permits surged by 11.8% to an annualized pace of 1275k in May, due to a 24.9% jump in multifamily permits to 592k. In particular, the jump was concentrated in the Northeast region, where permits increased by 103% to a pace of 264k. However, this was likely a temporary occurrence due to real estate developers rushing to qualify for tax incentives under a building program in New York City, which expired last night. Therefore, the strength in building permits in May overstates the underlying trend in numbers. That said, single-family permits, a good measure for underlying housing demand, rose by 2.6% to 683k in May, above the six-month moving average of 660k and suggesting that the housing market is on an upward trend.”
“We continue to forecast a gradual improvement in housing, albeit choppy, in the medium term.”
Key Quotes
“The Census Bureau today reported that US housing starts declined by 11.1% in May to an annualized 1036k—below expectations (Nomura: 1050k, Consensus: 1090k)—from a revised 1165k in April (previously reported as 1135k).”
“We expected a sizable decline in starts in May, because we largely attribute the strength in starts in April to a rebound from the weather-induced weakness in construction activity in February and March when housing starts dipped below 960k. Therefore, we do not believe the decline in starts in May is indicative of a new downward direction but a return of starts to their underlying trend.”
“We continue to expect construction activity to improve gradually as housing fundamentals become more supportive.“
“Building permits surged by 11.8% to an annualized pace of 1275k in May, due to a 24.9% jump in multifamily permits to 592k. In particular, the jump was concentrated in the Northeast region, where permits increased by 103% to a pace of 264k. However, this was likely a temporary occurrence due to real estate developers rushing to qualify for tax incentives under a building program in New York City, which expired last night. Therefore, the strength in building permits in May overstates the underlying trend in numbers. That said, single-family permits, a good measure for underlying housing demand, rose by 2.6% to 683k in May, above the six-month moving average of 660k and suggesting that the housing market is on an upward trend.”
“We continue to forecast a gradual improvement in housing, albeit choppy, in the medium term.”