Housing Starts, Permits Surge On Seasonal Adjustments, Rental Units

Tyler Durden's picture

Today's key economic data point, aside from the FOMC announcement of course, was the monthly Housing Starts and Permits report. And with November starts printing at 1091K, a massive 202K unit surge compared to the revised 889K in October, this was the highest monthly print since early 2008 and biggest monthly jump since... January 1990! Supposedly builders just can't get enough. Well, maybe. Until one again looks below the headlines, where one finds that a substantial portion of the jump is once again due to the builders' bet that rental housing demand will continue growing, as multi-family unit starts soared from 281K to 354K - just shy of the highest print since 2008 as well.

However, there was more: because if one assumes a major surge in seasonally adjusted data, there should be a matched surge in NSA data too. There wasn't, and in fact the NSA print rose by a very modest 5.5K to 82.8K actual houses started in November. Additionally, the single-family print barely rose from 49.2 to just 51.9, well below the highs seen in the summer of 2013, when unadjusted single-family starts were higher than the November print from March until August! In fact, at 51.9K, single unit homes are back to mid-2011 levels. Thank you seasonal adjustments.

But nowhere was the seasonal adjustment in today's data more evident than in the Housing Permits number. Yes, the headline number was great: it dipped modestly from an upward revised 1039K to 1007K but beat expectations of 990K handily. So what happens when one looks at the non-seasonally adjusted number? It cratered from 90.3 to 70.9K - this was the lowest print since February and the biggest absolute monthly drop in 5 years since November 2008!

Some seasonally-adjusted housing recovery.... in rental properties.