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Housing data from the US released on Tuesday came in above expectations. Analysts at Wells Fargo, point out multi-family starts explain the sharp rise. They add that the improvement in single-family starts is also running ahead of expectations, considering, not only have mortgage rates fallen to all-time lows but employment conditions for those more likely to be home buyers have improved considerably in recent weeks.

Key Quotes: 

“Housing starts blew past even the most optimistic expectations during July. Overall starts jumped 22.6%, with single-family starts rising a solid 8.2% and multifamily starts surging ahead 58.4%.”

“The big jump in multifamily starts explains why overall starts blew past consensus estimates, which were calling for a more modest 5.0% overall increase.”

“Multifamily starts are extremely volatile from month-to-month and starts had risen solidly during the prior two months. The vast majority of multifamily starts are for apartments, which have seen vacancy rates increase in recent months and have seen rents ease up a bit.”

“Homebuilder confidence also soared well-past expectations. The Wells Fargo/NAHB Homebuilders’ Index jumped six points to 78 yesterday, as builders reported stronger buyer traffic and sales in August. Given how low new home inventories are, the strength in sales points to continued gains in single-family starts. A move back above a one million-unit pace seems likely.”