September 21, 2021 | 08:48
Permits > Starts = More Construction Ahead
It all starts at home .....
Much better residential construction data this morning, which blew through expectations like a hurricane last month. Not bad considering the labor shortages in the construction industry, and supply problems.
U.S. housing starts jumped 6.0% in August to a 2-month high of 1.615 mln units annualized. This followed upward revisions in the prior two months—July's 7.0% drop is now a 6.2% decline; and, June's 3.5% increase is now a 4.0% rise. All the gains, however, were in multi-family units (condos, apartments) while single-family units fell for the second month in a row to a 4-month low. By region, it was more broadbased, with gains everywhere except in the West.
The future looks better. Building permits unexpectedly increased for the second consecutive month, with a 6.0% jump in August alone (biggest since January) to 1.728 mln units, with more applications allowed for both singles and multis.
And what's that key equation that we should always focus on? Permits > Starts = More Construction Ahead. And that's the bottom line.
Side note: Be wary of September's report. Hurricane Henri drenched the Northeast late in August, followed by Hurricane Ida.