Housing Starts And Permits Exceed Expectations

Housing starts and permits had been struggling to climb but climb they did in August, jumping far beyond Econoday's consensus range to a 1.364 million annual rate for starts and 1.419 million for permits. Readings are now slightly better than they were at their expansion peak early last year.

The data are broken into single-family and multi-unit homes, the former of most significance because of their higher relative cost but here readings, at 919,000 for starts and 866,000 for permits, are favorable but not quite as high as they were at last year's peak. Three-month averages, due to the sometimes extreme monthly volatility evident for example in today's report, are critical when evaluating housing data and for single-family homes they strongly confirm that a pivot higher is underway: at 888,000 and 839,000 rates for starts and permits for monthly gains of 4.1 and 2.2 percent respectively. Multi-unit rates also show sharp improvement including a 13.3 monthly jump in permits to a 553,000 rate.

Another plus in the report, and one that means new supply and new choices for home buyers, is a 2.4 percent monthly rise in housing completions to a 1.294 million rate. Low mortgage rates together with a strong labor market are fundamental positives and may be finally giving a late-year lift to a housing sector that otherwise has been mostly flat in 2019.