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aceventura3 · 06-20-2006, 01:49 PM

Guess what I saw today. May housing starts 1.957 million. The OP showed March at 1.99 million, April at 1.8 million. Perhaps the downward trend will begin to reverse or perhaps there will be a smooth soft landing to the bottom before a new upward trend. I guess the important thing is that new housing start data doesn't support a bubble bursting. No matter how you look at the raw data building close to 2 million new homes is a lot of new homes being built in a single year, considering there are about 70 million households in the US that about 3%. Wow.

http://online.wsj.com/article/SB1150..._whats_news_us

Quote:

Housing Starts Conform to Fed View
Of Moderate Slowdown in Sector
By BRIAN BLACKSTONE
June 20, 2006 5:04 p.m.

WASHINGTON -- Housing starts increased 5% last month, the first increase since January, suggesting that the sector is cooling in a gradual fashion despite rising interest rates.

The increase, which was well above analyst expectations, conforms to the Federal Reserve's projection of an "orderly" and "moderate" softening in housing, and provides further evidence that the central bank can nudge official rates still higher without doing significant damage to rate-sensitive sectors.
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May housing starts rose 5% from the previous month to a seasonally adjusted 1.957 million annual rate, the Commerce Department said Tuesday. Starts were down 3.8% from May 2005. Housing starts in April dropped 5.5% to a 1.863 million rate, which was revised up from an original estimate of a 7.4% decline to 1.849 million.

"The series over the past few months remains on a downward track, but the cooling in the official data remains very mild so far," said Ian Morris, economist at HSBC.

For May, the median estimate of 15 economists surveyed by Dow Jones and CNBC had housing starts up 1.7% at a 1.88 million annual rate.

Reflecting the recent mixed picture on housing -- new home sales rose in April while existing home sales fell -- Tuesday's report on housing starts showed permits for future building dropped by 2.1% in May to a 1.932 million annual rate. Permits, a leading indicator of activity, had been projected by economists to fall 2% to 1.933 million.
SLOWING HOUSING

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"Despite May's good numbers, starts will continue to fall in the coming months," noted Global Insight economist Patrick Newport.

Tuesday's housing figures may quell fears of a more dramatic decline suggested by other reports. For instance, the latest National Association of Home Builders confidence index fell four points to an 11-year low in June. NAHB expects single-family housing starts in 2006 to decline about 9% versus 2005. And though higher borrowing costs weigh somewhat on housing, the sector remains supported by positive consumer fundamentals like steady job and income growth.

According to the Federal Reserve's latest studies of regional economies, known as the "beige book" reports, "residential real estate markets continued to cool across much of the country -- with most districts reporting slower home-building and sales of existing homes." Fed Chairman Ben Bernanke last month called the housing slowdown "orderly and moderate."

The "generally declining trend" evidenced by the housing starts report "supports the [Federal Open Market Committee's] outlook for a modest slowing in economic growth," said Steven Wood of Insight Economics.

With core inflation accelerating and data showing continued economic growth, Fed officials are widely expected to raise interest rates a 17th straight time, to 5.25%, when they meet in late June.

Regionally, home construction last month rose 8.5% to 960,000 in the South and jumped 15.8% to 520,000 units in the West. Starts climbed by 1.7% to 183,000 units in the Northeast and dropped 15.8% to 294,000 units in the Midwest.

Breaking down the rate of 1.957 million overall for U.S. starts in May, single-family housing rose 2.1% to a rate of 1.586 million units, while starts of housing with two or more units increased by 19.7% to 371,000 units. Within that category of two or more units, groundbreakings of homes with five or more units -- or multifamily -- increased 25.4% to 321,000 units.

Nationwide, an estimated 189,300 houses were started in May based on figures unadjusted for seasonal factors. An estimated 182,700 building permits were issued last month, also based on unadjusted figures.