Housing Permits, Starts Surge Driven By Renewed Rental Housing Scramble

Tyler Durden's picture

After June's very disappointing housing starts and permits numbers, which plunged to 893K and 963K respectively well below consensus expectations, it was time for the Department of HUD to show how it's done, and moments ago the July housing starts and permits data literally blew away Wall Street expectations, as Starts soared from an upward revised 945K to 1093K, the highest print since November 2013, while permits surged from an also upward revised 973K to 1052K, smashing expectations of 1000K and the biggest beat since October.

Starts:

And Permits:

 

So is this the housing recovery everyone's been waiting for? Sadly, no, because one glance at the internals reveals that virtually all of the surge higher was on the back of multi-family housing units. Specifically, in permits, virtually all of the rise was due to multi-family, aka rental, unit construction, which soared by 73K, from 309K to 382K, a 24% increase, while single family, residential, units were up by a tiny 6K, or less than 1%.

 

Start was more of the same, because while single-family units here did post a modest improvement, rising to 656K, if well below the 710K highs reached in November 2013, all of the action was again in multi-family units, which exploded higher by a whopping 33% in one month, from 318K to 423K. This just happens to be the highest print since Lehman and matches the other highest mult-fam housing record in the past decade from January 2006, when the same number of multi-family housing units was started.

Finally, considering just how volatile this series has become, don't be surprised if in September the July data is revised wildly lower consiering the wild margin of error, especially on the Starts side, where the "final" data point is within 11% of the presented number.