17 Jun 2015
Weakness in US housing starts doesn’t signal towards a new downturn – Nomura
FXStreet (Barcelona) - Economists at Nomura believe that the expected decline in US housing starts indicates a return to its underlying trend, and doesn’t attribute to a downward turn.
Key Quotes
“Housing starts declined by 11.1% in May to an annualized 1036k—below expectations (Nomura: 1050k, Consensus: 1090k)—from a revised 1165k in April (previously reported as 1135k). On the composition of starts, single-family starts declined by 5.4% to an annualized 680k, just above the six-month moving average. Multifamily starts declined by 20.2% to 356k, after increasing to their highest level since April 2006.”
“We expected a sizable decline in starts in May, because we largely attribute the strength in starts in April to a rebound from the weather-induced weakness in construction activity in February and March when housing starts dipped below 960k. Therefore, we do not believe the decline in starts in May is indicative of a new downward direction but a return of starts to their underlying trend.”
Key Quotes
“Housing starts declined by 11.1% in May to an annualized 1036k—below expectations (Nomura: 1050k, Consensus: 1090k)—from a revised 1165k in April (previously reported as 1135k). On the composition of starts, single-family starts declined by 5.4% to an annualized 680k, just above the six-month moving average. Multifamily starts declined by 20.2% to 356k, after increasing to their highest level since April 2006.”
“We expected a sizable decline in starts in May, because we largely attribute the strength in starts in April to a rebound from the weather-induced weakness in construction activity in February and March when housing starts dipped below 960k. Therefore, we do not believe the decline in starts in May is indicative of a new downward direction but a return of starts to their underlying trend.”