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Takeaway: New Highs are still new highs, even if they're slightly less impressive than we thought they were a month ago.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume.

Starts & Permits | The Crawl Continues - Compendium 091715 

Today’s Focus:  August Housing Starts & Permits

Last months hangover in permits following the NY tax exemption pull-forward in May/June was acute.   The Starts data for August released this morning, which saw MF and SF starts in July revised lower by -5.9% and -2.6%, respectively, reflected a more significant flow through to starts activity than originally estimated.

The positive framing to the negative revision is that a post-crisis high in new SF construction activity being negatively revised to a slightly lower post-crisis high is largely inconsequential.    

The same conclusion probably holds for the August data as well.  Single-family permit activity rose to the strongest level since January 2008 and, while starts declined -3.0% MoM to +739K, they remain at current cycle highs and offer some solid justification for the 10-year high in builder confidence recorded in yesterday’s HMI print for September (Note: HERE).  On the multi-family side, Starts dipped -3% while permits rose +4% following last month’s cratering. 

In short, August saw a sequential but unremarkable dip while the positive, albeit crawling, trend of improvement in the New Home market remains ongoing.   

Looking ahead to the Existing Market, we’ll get the EHS data for August on Monday.  Relative softness in PHS in both June and July along with flat-to-down trends in Purchase Applications continue to argue for modest downside risk to reported EHS over the next month or two.

Starts & Permits | The Crawl Continues - Starts Total LT

Starts & Permits | The Crawl Continues - SF Starts TTM

Starts & Permits | The Crawl Continues - SF Starts LT

Starts & Permits | The Crawl Continues - MF Starts TTM

Starts & Permits | The Crawl Continues - MF Starts LT

About Housing Starts & Permits:

The US Census Bureau records the number of new housing units that have obtained permits for construction and those that have begun construction. This data includes new buildings intended primarily as residential units. The US Census Bureau defines a start as, “Start of construction occurs when excavation begins for the footings or foundation of a building.” 

Joshua Steiner, CFA

Christian B. Drake