July Housing Starts totaled 581k, 18k less than expected and down from 587k in June while Permits were 17k less than the consensus and 10k below the prior month. The drop in starts and permits was solely in the multi family category as single family starts and permits rose to the highest since Oct ’08. With a market that still has too many single family homes, less than expected building would have been better for the longer term condition of the housing industry at the short term expense to residential construction. To put the total 581k into perspective, it is down 74% from the high in Jan ’06 but up from the 50 year low of 479k back in April. July PPI fell .9%, .6% more than expected and the core rate unexpectedly fell .1%. A drop of 10.2% in gasoline prices hit the headline # lower while a drop in car and truck prices impacted the core. With the CPI out last week, the PPI is much less relevant to the market.

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