What I Saw Last Week

U.S. Housing Starts dropped to a seasonally adjusted annual rate of 1.172 million in April – I had forecast a rise to 1.255M units. The April number was down 2.6% from a downwardly revised rate of 1.203M (from 1.215M) for March.


The downturn in starts was driven by a 9.2% decline in multifamily construction, yet single-family starts were up by a woeful 0.4%.

Single-family starts declined 29.2% in the Northeast, rose 19.4% in the Midwest, dropped 3.4% in the South, but rose 9.1% in the West

The number of units under construction at the end of the period held steady at a seasonally adjusted annual rate of 1.074 million, which was roughly in-line with the first quarter average, so there won’t be any strong growth takeaways there for second-quarter GDP estimates.

The takeaway from the report stems from the drop in single-family permits (see below), which suggests there will be continued supply shortages and affordability constraints in the new home market.

U.S. Building Permits declined 2.5% to a seasonally adjusted annual rate of 1.229M units.  I had forecast a rise to an annual rate of 1.270M units.


Most disappointed was a 4.5% drop in permits for single-family units.  Single-family building permits declined 1.9% in the Northeast, 3.1% in the Midwest, 7.9% in the South, but rose 2.1% in the West.

What to Watch for This Week

U.S. New Home Sales were running at an annual rate of 642,000 units in March and I anticipate a contraction when the April numbers are released on Tuesday.  My forecast is for the rate to drop to 575,000 as the number of starts remains well below average.

U.S. Existing Home Sales were running at an annual rate of 5.71 million units through March and the April figure is likely to show a modest drop to 5.65 million.  There are still not enough homes for sale.

The second estimate for US GDP is likely to show very slight improvement from the 0.7% rate first announced.  I think that it will rise to 0.8% – an improvement, but still disappointing.

The early May Consumer Sentiment figure was measured at 97.7 and I believe that the final number will show a very small drop to 97.5.