James Knightley, chief international economist at ING, notes that the US housing starts and building permits were weaker than expected in June, but consumer fundamentals are in good shape and plummeting mortgage rates are stimulating demand, offering hope for a turnaround.
“June US housing starts – the number of new residential construction projects started – have come in a little softer than expected. 1253k projects got underway last month, 0.9% down on May, versus the consensus forecast of 1260k. Building permits were down 6.1% month on month, leaving them at their weakest level since May 2017.”
“We remain upbeat on the prospects for US housing. After all, the consumer is in great shape with employment at record levels, wages rising strongly in real terms and confidence remaining firm. Importantly, mortgage rates have plummeted in the wake of the plunge in Treasury yields.”