Permits Plunge But Starts Surge As Housing Data Suggests Rough Future Ahead

After April's disappointing dip in starts and permits, and following an unexpected drop in homebuilder optimism (blamed on surging lumber prices, and therefore Trump), May was expected to see a modest rebound - but it didn't work out that way.

It was a very mixed picture that paints an ugly scenario for what comes next...

  • Housing Starts surged a huge 5.0% MoM in May (smashing the 1.9% rebound expected) after a revised 3.1% drop in April.

  • Building Permits plunged a shocking 4.6% MoM (notably worse than the 1.0% decline expected) and dramatically worse than the revised 0.9% MoM drop in April.

Starts rose most since January as Permits puked most since Feb 2017...

The surge in Starts was driven by an 11.3% spike in multifamily starts to 404K from 363K, highest since January. Single-family starts up 3.9% to 936K from 901, highest since November.

The permits plunge was driven by multifamily (rental) permits, which dropped 8.5% from 460K to 421K, lowest since February. Single Family permits dropped 2.2% from 863K to 844K, lowest since September.

Also of note that is the new-, pending-, and existing-home sales all dipped in April (and after a brief rebound).

Broadly speaking, US housing data has been notably disappointing this year, and homebuilder stocks are following that trend...