US housing starts expected to slip back to an annualized level of 1.190 million units - RBS

Research Team at RBS, suggests that in August, they are looking for US housing starts to have unwound most of the July gain, slipping back perhaps to an annualized level of 1.190 million units.

Key Quotes

“Nevertheless, a reading in line with our estimate would be at the higher end of the range recorded in the current economic cycle and would still reflect the continuity of a gradual recovery in the new residential construction sector. Indeed, homebuilder confidence as measured by the National Association of Home Builders’ housing market index was little changed in August at 60 versus its H1 2016 average of 59. However, building permits (which serve as forward-looking indicator for housing starts) ticked lower by 0.8% in July to a seasonally adjusted annualized level of 1.144 million units. The slip was concentrated in the single-family segment, where the number of authorizations fell by 3.7%. Ground breaking for single-family units therefore could haven slid slightly lower last month.

Meanwhile, permits for multi-family units increased for a fifth consecutive month in July, clocking in a cumulative increase of 23% between March and July. However, multi-family starts (up 22% over the same period) have mostly kept up with this blistering pace of permit issuance, so that ground breaking activity could have taken a breather in August.”