Stick A Fork In Yet Another "Housing Recovery": Starts Tumble, Multi-Family Permits Collapse Most Since Lehman
Blame it on the... spring?
Moments ago, in addition to reporting CPI numbers which showed that the Fed has already met and surpassed its 2.0% inflation target (credible or not), the Dept of HUD released Housing starts and Permits data for the month of May. It was, in a word, disappointing. It was so disappointing in fact, that both housing starts and permits not only missed expectations, but tumbled from the previous month by the most since January and the great "Polar Vortex" which was the kitchen sink used to explain the collapse in US GDP in Q1. Perhaps it was the early arrival of El Nino?
In deatil: May Housing starts, expected to print at 1030K, tumbled from a revised April print of 1071K to just 1001K.
This was driven by an almost equal decline in both single and multi-family units, which means that it is not only Wall Street investors pulling out of the rental housing (aka multifam) market, but builders continuing to be skeptical about the single-family housing market.
To say that this roundly refutes the soaring NAHB index is an understatement, because while on one hand builders say they have not been more confident since Lehman, their actions show something vastly different.
With permits, the situation was even worse: the headline number was supposed to print at 1050K, a modest decline from the pre-revised 1080K. Instead, not only was April revised lower to 1059K, but the actual headline number tumbled by 68K to 991K. This was the first triple digit permit number since January, and the biggest drop also since the winter when it was all the polar Vortex' fault.
What caused this collapse? Simple. The housing bubble, at least as observed by Wall Street, is well and firmly over, because while housing permits for single family units posted a modest increase from 597K to 619K, the monthly collapse in multi-family permits, which crashed from 436K to 346K, or a drop of 89K was the single largest monthly drop since, drumroll, Lehman.
Don't cry for the Blackstones of the world though: after giving an artificial impression for the past two years that housing was recovering (all thanks to the Fed's cheap money and Rent-To-REO program), Wall Street's landlords, having taken over the US, are now moving on to greener pastures, like Spain.
As for the US housing market, stick a fork in it.
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