051617 EstimatesAlthough homebuilder sentiment came in stronger than expected for the month of May, data on Housing Starts and Building Permits for April came in soft.  As shown in the table to the right, Housing Starts came in at a seasonally adjusted annualized rate (SAAR) of 1.172 million, which was 88K below consensus forecasts for a rate of 1.26 million.  While that looks like a big miss on the surface, we would note that we have seen some volatile readings in this indicator over the last several months.  As recently as last December, Housing Starts actually missed estimates by 140K.  Building Permits also missed estimates in April, although the magnitude of the miss was considerably less.

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Looking at Housing Starts, after making a lower high in February, current levels are now a little more than 11% off their cycle peak of 1.32 million from last October.

051617 Housing Starts Overall

As mentioned above, Housing Starts have been considerably more volatile in recent months than Building Permits.  This can also be seen in the chart below, which shows a much smoother progression from month to month. That said, Building Permits are also close to 10% off their cycle peak back in June 2015.  But if you recall, that peak was induced somewhat artificially by a surge in filings for multi-family permits ahead of the expiration of tax credits which pulled activity forward.

051617 Building Permits Overall

Finally, the table below breaks down both Housing Starts and Building Permits by type of unit and region.  In terms of Housing Starts, what we found encouraging was the fact that all of the weakness was in multi-family units, which declined 9.2% m/m and 13.1% y/y.  Single-family units, on the other hand, rose 0.4% m/m and 8.9% y/y.  On a regional basis, weakness in this month’s report was primarily in the Northeast, where starts are down over 30% on both a m/m and y/y basis.  In the case of Building Permits, we saw the opposite trend where all of April’s decline was due to weakness in single-family units, while multi-family units actually rose slightly.

051617 Table

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