WorldWideMarkets Community

Forex Trading, Market News & Technical Analysis

Housing: The Pause that Refreshes?

Posted by Joseph Trevisani on Sep 20, 2016 1:00:22 PM

Groundbreaking in the U.S. residential housing markets declined more than expected in August but the past twelve months have been the best for new home construction since the recession and other indicators suggest that underlying demand remains strong.

Housing starts dropped 5.8 percent, to a seasonally adjusted annual rate of 1.142 million units, reported the Commerce Department on Tuesday in Washington.  The Bloomberg survey of economists had predicted a yearly rate of 1.190 million.   July's starts were revised slightly up to 1.212 from 1.211 million.

Permits for future construction slipped 0.4 percent to 1.139 million annually. They had been expected to rise 1.8 percent to 1.165 million from July's revised 1.144 million pace. 

Starts have averaged 1.161 million this year, up from 1.108 in 2015 and are at their highest since the collapse of the housing bubble in 2007 and 2008.

A steady job market, the unemployment rate has been at or below 5.0 percent, close to the theoretical level for ‘full employment',  for eleven months, modest wage increases and mortgage rates still near historical lows have supported  home sales and the building of new housing.  

The National Association of Home Builders Housing Market Index, issued yesterday, jumped up to 65 in September from 60 the prior month. This was the best level in eleven months, a sign that homebuilder confidence remains strong. Readings greater than 50 connote more respondents reporting good market conditions than poor.  The current sales index climbed to 71 its highest since 2005 and the six-month sales outlook exhibited it best score in eleven months. Prospective customer traffic was the strongest in ten months. 

Housing starts in the South, long the best market for home construction, fell 14.8 percent to a 543,000 annual rate. It was the steepest drop since October.  But applications for building permits rose 3.6 percent to 404,000. That was the best pace since 2007, indicating that the August construction showdown may have more to do with the recent rapid growth, than a demand based hiatus.  Activity in the three other regions, the Northeast, the Midwest and the West increased. 

Construction of new single family homes slide 5.98 percent  to 722,000 from 768,000. Multi-unit dwelling slipped 5.4 percent to 420,000 from 444,000, with 2-4 unit buildings jumping 55 percent on low volume, July 11,000, August 17,000, and the far more plentiful 5-units or more apartments houses falling 6.9 percent to 403,000 from 433,000.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg







Tools & Educational Resources

Forex 101LEARN MORE >>
Learn the basics of Forex and how to practice trading the markets.

GlossaryLEARN MORE >>
Confused by the language? Click here and search for key trading terms.

Browse our frequently asked questions and find your answers right away.

Access to the educational lessons, webinars and platform walkthroughs.


Get started with a FREE $10,000 Demo Account and experience the Forex Market RISK FREE!