{"id":1765,"date":"2020-06-17T14:48:55","date_gmt":"2020-06-17T18:48:55","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1765"},"modified":"2020-06-17T14:48:55","modified_gmt":"2020-06-17T18:48:55","slug":"may-housing-starts-and-permits-4","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1765","title":{"rendered":"May Housing Starts and Permits"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Starts: +4.3%; Permits: +14.4%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe housing market is setting up to be the\nleading force in the recovery.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  One of the first sectors that was allowed to\nreopen was construction and we are seeing the positives of the decision to do\nthat.  If you just looked at the\nconstruction numbers, you might not come to that conclusion.  Housing starts rose moderately in May, led\nby a major recovery in the West and a solid gain in the Northeast.<\/em><\/strong>  However, weakness persisted in the South and\nMidwest.  It was expected that starts would\nrise more<\/em><\/strong>, so this was a bit of a disappointment.  Indeed, if you compare the level of starts in May\nto February, you see a nearly 38% decline. \nSo why am I so upbeat?  Simple,\nhousing permit requests are soaring.<\/em><\/strong> \nThey were up sharply in May<\/em><\/strong> and have are now about 15% below\nthe February level.  That seems large,\nbut it can be made up reasonably quickly. \nMore importantly, for the last three months, permits were running over\nfourteen percent above starts.  Builders\nare not wasting money on permits and the big gap points to a strong increase in\nconstruction over the next couple of months. \n<\/em><\/strong><\/p>\n\n\n\n

Adding to the belief that the home construction and\nhousing in general will be solid going forward was a report by the Mortgage\nBankers Association.   As noted, “Purchase applications\nincreased to the highest level in over 11 years and for the ninth consecutive\nweek.<\/em><\/strong> The housing market\ncontinues to experience the release of unrealized pent-up demand from earlier\nthis spring, as well as a gradual improvement in consumer confidence”.  <\/em>That is very good news for builders, who seem\nprepared to meet the growing demand.    <\/p>\n\n\n\n

IMPLICATIONS:<\/strong> The home construction segment\nstill has a long way to go to get back to the pre-virus pace of activity.  But while other sectors, such as restaurants\nor manufacturing, may take a very long time to get there, the indicators are\nmounting that housing will be one of the first segments to recover.<\/em><\/strong>  Unfortunately, the depressed April and May\nstarts numbers point to home construction restraining second quarter growth\nsignificantly.  On the other hand, if the\npermits\/starts gap gets narrowed during the summer as expected, the sector\ncould add greatly to third quarter growth. \nThe markets have rallied on what I call false positive reports.  Those are numbers that look great, but only\nbecause they started from such a low level. \nWith housing, while the levels remain lower than hoped for, supporting\ndata argue for a major comeback<\/em><\/strong> that could get us within range of the\nFebruary standard of comparison in a reasonable time period.  But it is really not clear that the economic\ndata are the major drivers of the markets. \nThe Fed is buying just about anything that is being sold <\/em><\/strong>and\nthat includes individual corporate bonds. \nMr. Powell has made it clear he doesn\u2019t want to give up the gains \u2013\neven as he claims he doesn\u2019t target the equity indices.  Really?<\/em><\/strong>  It is best to watch what the Fed does, not\nwhat the Fed Chair says, as he doesn’t want to appear to be supporting the\nequity markets, which of course he is doing. \nAbout the only thing he admits he cannot do is to get money into the\nhands of specific household groups.  So,\nhe has strongly suggested that Congress get busy doing that.<\/em><\/strong>  Let\u2019s see: The Fed is supporting the equity\nand bond markets and the government is supporting businesses and\nhouseholds.  Isn\u2019t capitalism great?     <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Starts: +4.3%; Permits: +14.4% IN A NUTSHELL:  \u201cThe housing market is setting up to be the leading force in the recovery.\u201d WHAT IT MEANS:  One of the first sectors that was allowed to reopen was construction and we are seeing the positives of the decision to do that.  If you just looked at … Continue reading May Housing Starts and Permits<\/span> →<\/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-1765","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1765","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=1765"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1765\/revisions"}],"predecessor-version":[{"id":1766,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1765\/revisions\/1766"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}