HOUSEHOLD FORMATION: JANUARY TROUBLE?

Takeaway: Household growth in January vs the prior year decelerated by 84 bps sequentially. Is this a sign of slowing momentum?

This note was originally published February 08, 2013 at 11:28 in Financials

Household Formation Reflects Consumer Confidence

While the fiscal cliff didn't seem to deter people from forming households in December (December posted the strongest YoY growth since the upturn began), apparently the payroll tax hike did. 

 

The January monthly household formation data, a key leading indicator for housing, just became available on the Census Deptartment's website. On a year-over-year basis, household growth in January was +1.11%, a sequential deceleration from December's YoY growth rate of 1.95%, and the weakest one month print we've seen since the 3Q11 upturn began.

 

This is the most current data available, and has been a good leading indicator for the housing sector. Consider the sharp inflection in 3Q11 household formation trends, which preceded the actual turn in housing data and housing stocks that followed in October/November, 2011.

 

While a concern, we wouldn't get too worried about a single month's print, especially as January was lapping a tough comp. That said, we'll be keeping a close eye on February to see if this is indicative of an emerging trend.

 

HOUSEHOLD FORMATION: JANUARY TROUBLE? - HH formation Jan 13

 

Joshua Steiner, CFA

203-562-6500

jsteiner@hedgeye.com

 



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