Construction spending for the second quarter is off to a slow start as judged by housing starts. The Econoday consensus was for a 1% rise. Instead, starts declined nearly 5% from the initial June report, now revised lower.
Construction Indicators Slide
Mortgage News Daily reports Construction Indicators Slide, Housing Starts Suffer.
After posting unexpectedly high numbers in June, all three residential construction indicators lost ground in July, and one, housing starts, is now running below its year-ago rate. While the softening is primarily in the multi-family sector, starts have declined in four of the last five months and permits in three of the last four.
The U.S. Census Bureau and the Department of Housing and Urban Development said privately owned housing starts were at a seasonally adjusted annual rate of 1,155,000 units, a 4.8 percent decline from June’s estimate of 1,213,000, which was revised down from 1,215,000. July starts were down 5.6 percent from the 1,223,000-unit annual rate in July 2016.
Starts failed to meet even the lowest predictions of analysts polled by Econoday. Their estimates ranged from 1.174 million to 1.250 million with a consensus of 1.225 million.
Single family starts were at a rate of 856,000, down 0.5 percent from a month earlier but 10.9 percent higher than the same month in 2016. Multifamily starts plunged 17.1 percent to 287,000 units and are down 35.2 percent year-over-year.
The performance of permits was like that of housing starts, down 4.1 percent to a seasonally adjusted annual rate of 1,223,000 units. Permits however held on to an annual increase of 4.1 percent. The June permitting rate was revised higher, from 1,254,000 to 1,275,000.
Analysts had expected permits to decline, with a consensus estimate of 1.246 units. Here again the drop was outside the low end of the range of 1.230 to 1.270 million units.
Authorizations for single-family homes were at a seasonally adjusted rate of 811,000, unchanged from June and 13.0 percent higher on an annual basis. Multi-family permits were 12.1 percent lower than the previous month at 377,000. This was down 11.7 percent year-over-year.
Permits
Starts
Units Under Construction
Second-Half Outlook
Econoday came up with this overall assessment: “Putting all the pieces together: starts are down 5.6 year-on-year in weakness offset by permits which are up 4.1 percent. Permits are the forward looking indication in this report and today’s news, despite July weakness and general volatility in the data, is good. The housing sector, even with starts being soft, looks to be a contributor to the second-half economy.”
While it’s true that it takes a permit to begin construction, a permit does not guarantee construction will start anytime soon. At economic turns, they won’t.
Even assuming those permits turn into starts, the data still does not look to be a contributor to the second-half economy.
The number of permits and starts for multifamily explains what you need to know. 5-unit or more buildings will add more to construction spending numbers than 1-unit buildings. Permits and starts for multifamily structures plunged.
Mike “Mish” Shedlock
The problem with apartments is I don’t see 3-flats and 6-flats getting built anymore. Getting a large apartment building approved is so fraught with political interference that they’re basically corrupt from conception. Some areas don’t want large apartment complexes so the interference is by design; others only want them as union construction handouts which is even worse.
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10 years ago Housing started to become a bit of a problem:
“Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,381,000. This is 6.1 percent (±7.0%)* below the revised June estimate of 1,470,000 and is 20.9 percent (±6.1%) below the revised July 2006 rate of 1,746,000.”
https://www.census.gov/construction/nrc/pdf/newresconst_200707.pdf
Leading Bernanke to become a bit worried … but, never fear taxpayers:
“It is not the responsibility of the Federal Reserve–nor would it be appropriate–to protect lenders and investors from the consequences of their financial decisions.”
https://www.federalreserve.gov/newsevents/speech/bernanke20070831a.htm
Well, the rest is history.
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Wow, good post and very timely.
From the (Tony’s link) speech of Aug 31, 2007 :
“About 56 percent of the home mortgage market is now securitized, compared with only 10 percent in 1980 and less than 1 percent in 1970.”
1970! An open market mortgage funded with currency issued before the gold window shut. No wonder dad could afford to buy a house.
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On the other hand, one recalls Aug 6, 2007 :
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I expected it !
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Depression is something that nobody desires but every so and so it rear its ugly head, it’s cyclical,monetary policy has been able to delay it but over production and new modes of manufacturing are in the making.Every country in the world wants to export more than it’s import a physical impossibility..Human will have to learn that growth is finite.
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As a human I’m perfectly familiar with the idea of finite or negative growth. It’s called aging.
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Why is it that every negative economic indicator is “unexpected”? Hmmm…
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Because you are always supposed to be “confident” about everything economic and financial.
Do you not feel “confident”?
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Higher interest rates should help, no?
lol…
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Zero interest rates hurt savers (people on pensions, etc).
Zero interest rates do not help “Main Street” — not the one in the USA, nor the one in Japan (and arguably not the one in Europe either).
Zero interest rates do help bank CEOs collect bigger bonuses.
So yes, higher interest rates WILL HELP where it matters, unlike zero rates that are a mistake
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You seem to be of the mistaken impression that when the Fed raises its Fed Funds target, that banks increase the rates they pay to depositors. They most certainly do not.
The banks are sitting on over $2 TRILLION in excess reserves and could not care less whether you are a deposit customer of theirs or not.
The only rates that move in lockstep with Fed Funds are rates on variable-rate loans and lines of credit, such as HELOC’s and Credit Cards.
The days of earning decent rates on bank deposits are OVER for good.
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I haven’t had an account with JPM Chase in almost two decades — I have no idea if Jamie Dimon will give you a fair shake on your deposits, but I seriously doubt it. If you are still banking with him, you deserve to suffer — you are doing it to yourself.
If you have a pension, or insurance policy / annuity, or a mutual fund that buys bonds… then you will see yields increase. Not necessarily in lockstep with FF, but yields will increase. If you have savings (either directly via an account or indirectly via a pension) — yields will increase. Right now, your pension is “assuming” 7% return and (if its lucky) getting half as much — so you are robbing your own pension to argue with me.
If you are a debtor… come on. Pay your bills. Stop borrowing too much and blaming some idiot at the bank. Stop pretending like Obamacare is “working” for you when you have to go into debt over it. Stop pretending the housing ATM that FedNY Dudley talks about is free money. Stop pretending period.
Zero interest rates is about you robbing your right pocket to fill your left pocket while giving Jamie Dimon a commission. You are a fool if you think you are coming out ahead
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“Zero interest rates is about you robbing your right pocket to fill your left pocket while giving Jamie Dimon a commission.”
Jamie Dimon is a billionaire, from doing so.
I get his ads in the mail, “get up to $400, on us.” A lie.
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You get “UP TO” $400… if you give Dimon $4000, he’ll give you $400 back. If you only give him $2000, you only get $200 back.
When you cost him money, its a tragedy.
When he loses taxpayer money, or shareholder money (or both) — its a tempest in a teapot.
Even though he didn’t found JPMorgan or Chase (or anything else), he seems to feel it is a vehicle to force his own political views on everyone. Here you and I thought JPM was a bank, not a political publication.
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And meanwhile, RV sales are booming.
A mere co-incidence?
Hmmm…..
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You need to live somewhere when you lose your house.
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RVs are an indication of an economy near the top.
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RV sales are booming? And your point? Just adding to ones debt.
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…or simply empty nesters downsizing. Go hit the road for a year and let single family housing cool down until you find prices to your liking.
RVs present many different scenarios, hard to place squarely on any one factor.
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People are LIVING in RV’s – especially in the utopian paradise known as Kalifornia.
There are residential neighborhoods in the vicinity of large Silicon Valley tech companies where the streets are CHOKED with parked RV’s during the workweek. I have seen it myself. Employees live in the RV all week, and then commute back to the ex-burbs (100+ miles away) to be with the rest of the family for the weekend. A lovely lifestyle.
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I wonder if you can vote as a resident of wherever you park your RV. Its California after all.
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The dovish July Fed minutes has caused the dollar to sell off just when everybody was saying the dollar has seen its lows so jump in on the long side, and short the precious metals. Mish I’m just guessing here, but I really do think that the Fed is even more worried with all these weak economic numbers. with the the exception of yesterday, that we are heading into a recession, and the only way to get any kind of growth at all will be to take down the dollar hard!
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On the other hand, retail sales came in twice as strong as expected, one outcome of rising employment? That should be very helpful for rest of year and beyond if it carries on.
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On the other hand, retail sales came in twice as strong as expected, one outcome of rising employment? That should be very helpful for rest of year and beyond if it carries on.
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Possibly.
Or the economists at the Census Bureau have adjusted properly for the recent moves by many schools starting early. Back to school purchasing used to be in August. Now in July. My county moved up by 2 weeks last year. First day (for students) August 9th.
Or sales driven by price breaks – take it away Dicks CEO:
“There’s a lot of people right now … in retail and in this industry in panic mode,” Stack added. “They seem to be in panic mode with how they’re pricing, and we think it’s going to continue to be promotional, and at times irrational, going forward.”
https://www.cnbc.com/2017/08/15/dicks-sporting-goods-says-retail-is-in-panic-mode-as-stocks-tumble.html
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er, haven’t adjusted properly
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Anonymous or H T, which one is the robot?
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Also some guy said if the yield of the 10 year note drops below 2.20 will be an onimous omen or something like that. This possibility increases in my opinion if you look at a chart of crude oil over the last 3 or 4 months.
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I can’t afford the huge Mcmansion I live in now, so Wall Street analysts figured I was going to run out and buy an even bigger McMansion? With an ever increasing percentage of my paycheck going to property taxes and Obamacare?
Who thinks Obamacare increases will leave any extra money for housing or new cars or ANYTHING? And what are you people smoking?
Lucky consumers (with rising paychecks) will be diverting their raises to pay for Obamacare. Unlucky consumers will be filing for obamacare payment assistance.
Until Obamacare gets repealed, the best the economy can hope for is stagnation. Congress will try to fight this inevitability, but the math is overwhelming. Obamacare gets repealed or the economy gets swallowed by premiums.
The King cannot prevent the tide from coming in, and neither can Ryan, McConnell, Pelosi and McCain. Tax reform isn’t possible without repealing Obamacare costs. Neither is increased military spending or whatever McCain is pushing this week.
30% Obamacare increases are not possible in an economy that grows 6% in a really great year and has barely grown 2% in recent years.
Kill Obamacare or kill the economy. Everything else will take a back seat from now on, no matter how much Congress or the public cries.
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Drop your insurance.
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Iowa is looking at 57% Obamacare increases next year… Obamacare inflation is quickly looking like Venezuela inflation.
It won’t be long before there are riots between extremist liberals trying to force their insurance scam on the public, and horrified mothers desperate to help their babies. The mothers can buy insurance (maybe), but they can’t buy health care or pay the deductible so their babies will die.
That’s Obama for ya
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Lately Mish when I post with you I feel like Rodney Daingerfield,so I guess there’s a good reason for this personality disorder sung by Aretha Franklin
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Reblogged this on World4Justice : NOW! Lobby Forum..
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So a firm based in California (where else?) called “Crowds on Demand” offered $25/hour for political agitators to protest in Charlottesville and stir up trouble…. and they placed the ad Monday (five days BEFORE the nonsense).
George Soros funds organizations that pay people to protest — and at least some of the groups offer training in political violence. How is George Soros not being charged with financing terrorism???
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“Nobody is skeptical of crowds. Of course, in five years that could change.”
https://story.californiasunday.com/crowds-on-demand
Has an look at what crowds on demand is about. An odd mixture of unreal merging with real, even mentions no Kurklos service, and if you read up on Kurklos background it is also described as theater taking a meaning of its own. Strange world.
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The US has descended into a world where white supremacists are fighting to protect accurate history, while the intolerant and oppressive left is using Orwellian tactics to sanitize and edit history to their liking.
Isn’t it “supposed to be” the other way around? 🙂 Aren’t we supposed to fear the supremacists editing history for their own warped political ends? Colleges used to champion free speech and different viewpoints — even views they strongly disagreed with.
Now the colleges censor what you are allowed to think and charge students $90K per year for the privilege of being indoctrinated in hate.
Its a mad mad world
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Medex the world is indeed going mad. I just cannot believe how gullible and actually stupid the American people are these days. The whole country for the most part now believes these statues are racist and yet the start of the Civil War had absolutely nothing to do with slavery!!!!
During the Civil War the North did not stop slavery until the letter of emancipation was ratified. Kansas, Missouri, Iowa and two other Yankee states still used slaves during the Civil War. I guess Lincoln is next after all in his memoirs and official documents he wanted to originally send all the Africans back to Africa.
Trump is right on this one both sides are to blame.
We allow people to destroy public property and then blame our president for this mess please the finger need to pointed at the organizers on both sides. Soros is indeed one of the offenders along with many other people. You cannot erase history my friends and yet when you try to discuss real history and back it up with facts these people chose to ignore facts that are easily discovered on their phones. I guess they just use them for social networking and face book.
It saddens me to see people acting like thugs and getting away with it. The rule of law has left the good ole USA.
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Medex Man you are spot on boy with your remarks about George Soros! This man has used his wealth in just about every conceivable way to hurt America. No that’s not strong enough. This man is trying to destroy this country and he’s having a lot of success except his failure to deliver the presidency to Hillary! The way this man thinks, his values, his vision as to how people should live their lives is totally perverted. Well I just deleted a bunch of stuff as my emotions were starting to get out of hand, so need to shut up.
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The building industry continues to go gangbusters in Michigan.
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Its a Manic depressive economy, and it can turn just that fast. Its simply great until the reality sets in that it’s not, and then it is nothing but shit. 2008/9 destroyed a lot of construction related businesses, right when it was the best of times. All we need is some irrational enthusiasm to know we are there.
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That’s true. We went from crazy busy to instant slow during 2008 crash. No rose colored glasses here. We know it can happen again.
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“Housing Starts Unexpectedly Sink, Multi-Family in Huge 34% Retreat Year-Over-Year”
In New York City that would not be surprising. “Over the past two years, the population of homeless students in NYC’s public schools has exploded, increasing by 20% between the 2015-2016 school year and the 2016-2017 school year” Apparently, 1 in 7 students is homeless.
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The homeless population of Los Angeles has apparently grown 23% over the last year. More and more people can’t afford the cost of a living space.
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And the extremist liberal CEO of faceplant (back from buying an entire island in Hawaii) decided to buy the two adjoining lots next to his mansion compound near San Fran… so neighbors can’t see him flopping next to his pool. He needs his privacy, you don’t.
Clearly the CA homelessness problem is all Vladimir Putin’s fault, not the fault of extremist CA oligarchs driving up housing costs using IPO money.
Faceplant needs his privacy (he is running for Pres in 2020?), you don’t need privacy, and most CA residents don’t even deserve a roof over their heads. The mud covered FB users get to see faceplant drive by in a limo, and that should really be enough for them.
Its called “progressive” and “liberal” — and you had better like it, and say you like it, unless you want to get fired (that’s an example of tolerance in case you wondered).
BTW, hold your breath starting now. Next Monday the progressives are going to tell you what your opinion is about George Washington — and you had better agree if you know what is good for you. Don’t even think of breathing over the weekend, it will show on your timeline and you will be punished
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Pingback: US IP REPORT SHOWS AUTO PRODUCTION FALLING AT FASTEST PACE SINCE GREAT RECESSION – MATASII
Unexpected?
Unexpected by the deaf, dumb & blind kid… he sure plays a mean pinball, but everyone else saw/heard this coming in spades.
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