Wednesday, May 16, 2012

It's The Economy Stupid: Housing Starts

Okie dokie, Housing Starts look good, Building Permits not so much.  Mortgage Apps explode!   


Economic Event


Economic Survey

Actual Reported

Original Prior

Revised Prior

MBA Mortgage Applications

MAY 11





Housing Starts






Housing Starts  MoM






Building Permits






Building Permits  MoM







Wire: BLOOMBERG News (BN) Date: May 16 2012  7:37:03

New U.S. Housing Construction in April Exceeds Forecasts (1)


By Shobhana Chandra

     May 16 (Bloomberg) -- Builders in the U.S. broke ground on

more homes than anticipated in April, indicating the residential

real estate industry is stabilizing.

     Starts rose 2.6 percent to a 717,000 annual rate from

March’s revised 699,000 pace that was stronger than previously

reported, Commerce Department figures showed today in Washington.

The median estimate of 80 economists surveyed by Bloomberg News

called for a rise to 685,000. Building permits, a proxy for

future construction, fell from a more than three-year high.

     Employment gains, cheaper homes and record-low mortgage

rates are combining to lift demand and encourage builders to take

on projects. At the same time, distressed properties are

thwarting a quicker recovery in the housing market three years

after the end of the recession it helped trigger.

     “We’re at a point where we see more light and less

tunnel,” said Michael Gapen, a senior U.S. economist at Barclays

Capital in New York. “Residential construction is no longer a

drag on the economy and will contribute to growth.”

     Estimates in the Bloomberg survey for April ranged from

641,000 to 730,000. The prior month was revised from 654,000.

Today’s report reflects revisions dating back to January 2010.

     Stock-index futures maintained gains after the figures, with

the contract on the Standard & Poor’s 500 Index expiring next

month rising 0.6 percent to 1,335.9 at 8:32 a.m. in New York.

     Permits decreased 7 percent to a 715,000 annual pace last

month from 769,000 in March, which was the fastest since

September 2008, today’s report showed. March was revised from a

previously reported 764,000 pace.


                      Single-Family Starts


     Construction of single-family houses climbed 2.3 percent to

a three-month high 492,000 rate from 481,000 the prior month.

     Work on multifamily homes, such as townhouses and apartment

buildings, increased 3.2 percent to an annual rate of 225,000.

     Two of four regions had an increase in overall starts,

reflecting an 11.6 percent gain in the South and a 6.7 percent

rise in the Midwest, today’s report showed.

     The outlook for residential real estate is improving,

figures signaled yesterday. The National Association of Home

Builders/Wells Fargo index of builder confidence jumped to a

five-year high, the Washington-based group reported.

     Borrowing costs remain attractive. The average rate on a 30-

year fixed mortgage fell to an all-time low of 3.83 percent in

the week ended May 10, according to data from Freddie Mac going

back to 1971. The average 15-year rate dropped to 3.05 percent,

also the lowest ever, the McLean, Virginia-based mortgage-finance

company said.


                      Housing Affordability


     A housing affordability index that’s based on a combination

of resale prices, household income and mortgage rates reached an

all-time high in the first quarter, the National Association of

Realtors reported yesterday.

     One source of strength in residential construction is that

work on apartment projects has climbed as the foreclosure crisis

turned more Americans into renters. While demand for multifamily

units, which include townhouses, is projected to provide

homebuilders with new business, it remains volatile.

     In the U.S. Southeast region, which has lagged behind the

U.S. recovery the past three years, building is accelerating, led

by new construction of condominiums in Miami, according to

SunTrust Banks Inc. Chief Executive Officer William Rogers.

Housing in the Nashville, Tennessee, and Washington markets is

“back on the upswing,” while Marco Island and Sarasota,

Florida, “are showing improvement,” he said.

     “We are starting to see some traction,” he said in an

interview in Atlanta, where the lender is based. “In housing,

things are stabilizing to stabilized.”


                    Foreclosures, Inventories


     Builders still have to contend with a stream of distressed

houses returning to the market, adding to inventory and pushing

prices even lower.

     Foreclosures and tight credit markets remain a constraint on

the housing industry, said Federal Reserve Governor Elizabeth

Duke in a speech yesterday in Washington.

     While still-elevated foreclosures are “indicative of a

historic level of homeowner stress,” she said, “there are signs

that further gradual improvement may lie ahead.”

     There are “some promising signs in the trend of house

prices as well” and “somewhat encouraging” indicators of

housing construction activity, Duke said.



John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury


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