Lots of “disappointing” data on housing this morning, but there’s more to the story than those headline figures.
Housing starts–which gauge new home construction–dropped nearly 9% last month. Excluding multifamily builds, single-family starts–a bellwether for the whole housing market–plunged to their lowest level in nearly two years, a 805,000 seasonally adjusted annual rate.
Sounds terrible, but as J.P. Morgan points out, that plunge followed a surge in January that saw single-family starts hit their highest level yet of the entire expansion: 970,000 (also a seasonally adjusted annual rate).
As for single-family building permits, which are a leading gauge of starts, they have certainly been soft lately, unchanged last month after falling the two months prior, JPM economist Daniel Silver noted.
This is not new: recall that residential investment actually declined outright last year even as GDP grew roughly 3%. As my former colleague (and skateboard enthusiast) Conor Dougherty recently observed in the N.Y. Times, “Housing Is Already in a Slump. So It (Probably) Can’t Cause a Recession.”
As for home prices, the 20-city Case-Shiller index for January grew only 3.6%, the least since late 2012. But as Peter Boockvar of Bleakley Advisory wryly pointed out, “Fortunately for those looking to buy a home, particularly that first time Millennial, the pace of home price gains continues to slow.”
The softness in home prices, in other words, is arguably a good thing from a macro point of view. Couple that with the plunge in interest rates this week that should lower mortgage rates quite a bit, and it could be a decent spring home-buying season after all.
More at 1 p.m.! See you then…
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