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.
Recent History
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.
Plodding Along
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%.
For further discussion, please see GDP Forecasts Dip Again: Forecasts Compared.
Mike “Mish” Shedlock.
Steve Keen Tweet added as an addendum to my “Free Money” to banks post
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“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.”
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Well, the Econoday Parrot did not stop at housing starts. Love the spin on redbook chain store sales:
“Same store sales are up 2.3 percent year-on-year in the April 15 week, accelerating the yearly gains pace to the best level in over a year. Month-to-date same store sales were up 1.2 percent versus the prior month, the strongest reading since May of last year. Year-on-year monthly sales also posted the strongest gain in at least a year at plus 2.0 percent. Retailers in Redbook’s same store sample are reporting acceleration in sales and further evidence that high consumer confidence may be finally materializing in increased purchases. The report indicates stronger core retail sales for the current period.”
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The Parrot, uh, left out a tidbit …that, uh, may have made a difference. Easter was in March in 2016. So this past week’s comparison was for a “dead” week in April 2016.
Shameless … and Useless.
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Consistently bad hard economic data is now pouring in including manufacturing production. Industrial orders takes the cake. While these order are boosted by aircraft orders, Boeing is quietly laying off or has laid off 10% of its workers over the last 12 months. Shurly something inconsistent here. It is clear that now that the Trump smelling salts no longer works, the US economy is sliding into contraction. Now it is all up to China. Can they hold the line in 2017 so that Xi gets his second term. It is going to be close.
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China consumer and corporate debt grew $1.014 trillion in Q1 (a record) … an utterly amazing number. Records are made to be broken … right up to the brick wall.
Oh, and in the US the continuing resolution (no budget passed for fy2017) expires april 28th … govt shutdown??? …. not to mention debt ceiling needs to be raised sometime. March 31st the US Treasury had $181.066 billion in cash and monetary assets … compared to $402.619 for March 31st 2016.
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But…but…but…we have to maintain “confidence”.
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“Optimism among home builders has been very strong and acceleration is beginning to appear in actual residential construction.”
Are we still pushing “green shoots”?
Maybe we should go ask car salesmen how optimistic they are. Asking people who’s job it is to SELL about optimism is simply silly. No decent sales person ever talks down their product….unless they have something even more lucrative to sell. And these are ALL sales people…everybody is selling, like a fish never stops swimming. If we are honestly waiting for sales people to tell us it’s all crap, we’ll have already seen it in the history books.
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Just the pause that refreshes before the next substantial leg up…Chinese are really start to move into the suburbs of the NY/TriState area in a BIG way. Prices will only go higher and higher….see Vancouver….see Toronto…except this is ‘MeriKa. Half of NEW homes (previous 1950’s teardowns) over $1m going to Chinese. They are the only ones out shopping in the Malls & stores during the day, as they don’t seem to need to work. They only drive BMW & Mercedes. Simply amazing to watch….happening very quickly.
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What’s wrong with this report ?
March ’17 permits are up on March ’16 which was up on March ’15 which was up on March ’14 which was up on March ’13.
Did anyone call the Boom ?
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