Housing Starts

June Housing Starts totaled 582k (highest since Nov ’08), 52k more than expected and May was revised up by 30k. Permits were also above the consensus coming in at 563k, 39k more than expected. The gain from May was solely in the single family home category as multi family starts fell. Single family starts rose in both the South and West, the two areas of the country that least need new starts. California’s $10,000 tax credit is for new homes only which encourages home building in a market that still has too much inventory. In terms of residential construction’s contribution to GDP, the higher than expected number is a positive but from an inventory view, it’s not what is needed. Today’s bounce in starts follows yesterday’s July NAHB # which rose to the highest level since Sept ’08. Net-net, existing home sales make up most of the market and is more relevant in terms of moving the inventory needle but less new building would help.

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