TRADEX GLOBAL INTERNAL COMMENTARY
Housing starts fell 1.1% to a annual rate of 746k. The consensus estimate was 756k, so starts
were slightly negative. The better news
was the strong “building permits” number, which rose to an 812k annual
rate. This was better than consensus and
is the highest level in four years (The glass half-full!). We still believe that we will need to see
fewer foreclosures, easier access to credit and a much stronger job market in
order to see this trend get stronger.
From the ground level, I see a lot of private equity money buying
foreclosed homes and renting them out.
This inventory reduction combined with slowing new delinquencies shows
promise for homebuilders. Keep nimble. – Michael Beattie
EXTERNAL RESEARCH COMMENTARY
New-home construction in the U.S. fell in July, while the
number of building permits jumped to the highest level in four years,
indicating the industry will keep improving in the second half of the year.
Starts fell 1.1 percent to a 746,000 annual rate from June’s 754,000 pace,
Commerce Department figures showed today in Washington. The median estimate of
79 economists surveyed by Bloomberg News called for 756,000. Building permits, a
proxy for future construction, rose to an 812,000 pace, the most since August
2008. Less costly properties combined with record-low mortgage rates are
reviving demand, helping builders like PulteGroup Inc. (PHM) boost profits. A
drop in foreclosures, increased hiring and easier access to credit may be
required to foster a more pronounced and sustained rebound in the industry that
triggered the recession. “It looks like things have turned up for housing,”
said Brian Jones, a senior U.S. economist at Societe Generale in New York,
whose permits forecast of 805,000 was the highest in the Bloomberg survey. “We
are moving in the right direction. We are coming off such a low base that we
still have a long ways to go.” Starts estimates in the Bloomberg survey ranged
from 730,000 to 800,000. The prior month was revised down from a previously
reported 760,000 pace.
Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com
203-863-1500
@Tradex_Global
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