US Building Permits Growth Signals Positive Housing Outlook

U.S. housing starts rebounded strongly in June and building permits surged to a near eight-year high, pointing to a rapidly strengthening housing market.

Groundbreaking increased 9.8 percent to a seasonally adjusted annual pace of 1.17 million units, the Commerce Department said on Friday.

May’s starts were revised up to a 1.07 million-unit rate from the previously reported 1.04 million-unit pace.

Economists polled by Reuters had forecast housing starts increasing to a 1.11 million-unit pace last month.

Rising household formation as a tightening labor market encourages young adults to leave parental homes is boosting demand for housing, especially apartments.

Permits for future home construction increased 7.4 percent to a 1.34 million-unit rate, the highest level since July 2007. Permits have been above a 1 million-unit pace since July.

A survey on Thursday showed builders’ confidence held at a more than 9-1/2-year high in July, suggesting that both permits and groundbreaking have scope to rise further. Economists anticipate that the housing market will mitigate the drag on the economy from a struggling manufacturing sector.

While groundbreaking for single-family homes, which account for the largest share of the market, slipped 0.9 percent to a 685,000 unit pace, that reflected a big drop in the Northeast.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza