{"id":1286,"date":"2018-06-19T11:45:03","date_gmt":"2018-06-19T15:45:03","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=1286"},"modified":"2018-06-19T11:45:03","modified_gmt":"2018-06-19T15:45:03","slug":"may-housing-starts-and-permits-2","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1286","title":{"rendered":"May Housing Starts and Permits"},"content":{"rendered":"<p><strong><u>KEY DATA:<\/u><\/strong> Starts: +5%; Year-to-Date: +11%; 1-Family: +3.9%; Permits: -4.6%; Year-to-Date: +8%; 1-Family: -2.2%<\/p>\n<p><strong><u>IN A NUTSHELL:<\/u><\/strong> <strong><em> \u00e2\u20ac\u0153The rebound in home construction means the sector might actually add to growth this quarter.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n<p><strong><u>WHAT IT MEANS:<\/u><\/strong> <strong><em>Home construction had been lagging this quarter<\/em><\/strong>, which was a bit of a surprise. <strong><em>And with mortgage rates rising, there was concern the sector could falter. Instead, housing starts rose solidly in May.<\/em><\/strong> But the data were all over the place. For example, <strong><em>construction in the Midwest surged by over 60%. Multi-family building activity nearly doubled<\/em><\/strong> and single-family starts jumped 45%. Those changes came after large declines in April. We are talking huge changes that are usually seen in the winter, not the spring. Meanwhile, <strong><em>starts were down in the other three regions, with the Northeast posting a double-digit decline<\/em><\/strong>. So we need to step back and see what happens in June before we make any major conclusions about the strength of the home construction sector. <strong><em>Looking forward, permit requests moderated, but they had been running well above the pace of construction and it was inevitable there would be a pull back. <\/em><\/strong> A massive increase in the Northeast and a more moderate decline in the Midwest were more than offset by weakness in the West and especially the South. <strong><em>For the last three months, permit requests ran higher than starts, so there is a reasonable expectation that the large jump in construction will be sustained, at least for a couple of months.<\/em><\/strong><\/p>\n<p><strong><u>MARKETS AND FED POLICY IMPLICATIONS:<\/u><\/strong> <strong><em>Second quarter growth looks like it was solid and the remaining question is how big a number will print.<\/em><\/strong> Estimates range up to 4% or even more and that cannot be ruled out. I am more in the 3.5% range (actually, a touch below that), but there is still a lot of data to come that could change that. <strong><em>The strong housing number could push up GDP estimates. <\/em><\/strong> Regardless, the economy is in good shape, which just about everyone understands. <strong><em>Broad based growth would support the Fed\u00e2\u20ac\u2122s expected four moves this year while not spooking investors too much. It is hard to argue that the economy will falter from a fairly modest one-half percentage point increase in short-term rates if the economy is expanding robustly. <\/em><\/strong> Indeed, if or when the current trade war fears fade, investors will get back to watching economic variables and those look good.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>KEY DATA: Starts: +5%; Year-to-Date: +11%; 1-Family: +3.9%; Permits: -4.6%; Year-to-Date: +8%; 1-Family: -2.2% IN A NUTSHELL: \u00e2\u20ac\u0153The rebound in home construction means the sector might actually add to growth this quarter.\u00e2\u20ac\u009d WHAT IT MEANS: Home construction had been lagging this quarter, which was a bit of a surprise. And with mortgage rates rising, there &hellip; <a href=\"https:\/\/naroffeconomics.com\/?p=1286\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">May Housing Starts and Permits<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1286","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1286"}],"version-history":[{"count":2,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1286\/revisions"}],"predecessor-version":[{"id":1288,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1286\/revisions\/1288"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}