Housing Starts & Permits Fall
After seeing some interest rate relief in the past week, but still up considerably from last year still near 4 year highs Housing Starts and Permits missed expectations by a wide margin not even hitting the bottom end of the consensus according to Bloomberg. Housing starts fell 7.0% in February while building permits fell 5.7%.
Single-family homes are the key component in this report and permits fell 0.6% while starts rose 2.9% year over year. Year-on-year growth was still at 4.6%. Starts for multi-family homes fell nearly 19% year over year where was the area of most weakness.
Earlier in the week, seasonally adjusted Mortgage Applications for the 3/9 week actually showed a rise of 3% from the prior week at least lending some hope that this trend will alleviate some in March.
Overall housing is still expanding (esp in single family homes), but is showing clear signs that affordability is becoming even more an issue as rates rise. The trend for 2018 remains in a cooling phase after an extended period of recovery. The chart below courtesy of Bloomberg shows how the major housing related data points were reported vs expectations---it clearly shows housing data has been missing expectations. With rates nowhere near 2008 levels on the 10 year Treasury interest rates it appears rising rates will be the key factor for slowing growth in 2018. For those planning in housing related sectors I would not expect housing growth in 2018 vs 2017 to be better.