No ‘V’ Here – US Housing Starts Hugely Disappoint

Following April’s bloodbath to five year lows, housing starts and permits were expected to rebound V-like in May (despite lockdowns being in full swing that month). And as we suspected, the data disappointed with a massive miss in Housing Starts (+4.3% MoM vs +23.5% MoM expected). Building Permits rebounded more than Starts but also disappointed (rising 14.4% MoM against expectations of a 16.8% surge).

Source: Bloomberg

On an aggregate basis, it’s clear the “V” was disappointing…

Source: Bloomberg

Both single- (+11.9%) and multi-family (+18.3%) permits rebounded…

Single-family starts barely rose at all in May (+0.1%), hovering near their lowest since March 2015. Multi-family starts rose 16.9% MoM…

All driven by a huge surge in The West (amid quarantine):

• Northeast: 12.8%

• Midwest: -1.5%

• South: -16.0%

• West: 69.8%

Finally, we note that these moves in forward-looking permits come as mortgage purchase applications continue to soar…

Source: Bloomberg

Is this just pent up demand in the usual seasonally strong sales period? And, or are homebuilders far less confident than their “sentiment” index would suggest about the “V”?