According to the recent monthly U.S. Census Bureau report regarding the new residential construction statistics for March 2012 there was a decrease in housing starts but a slight increase in building permits.
Privately owned Housing starts decreased in March 2012: the seasonally adjusted annual rate reached 654,000 compared with 694,000 in February 2012 – this is a 5.8% decrease; alternatively, the annual rate for March 2012 was 10.3% above the March 2011 rate of 593,000.
Despite the decline in housing starts in March compared with the rate a month earlier, this rate is at least slightly higher than a year earlier.
The seasonally adjusted annual rate of building permits for privately owned housing reached in March 2012 747,000 – a 4.5% increase compared with February’s annual rate of 715,000. The March 2012 rate was 30.1% above the rate in March 2011.
This news provides a mixed signal for the progress of the U.S housing market as the housing starts might have risen on a yearly scale but declined on a monthly scale; on the other hand building permits increased on both counts. Since of the two, the housing starts are more important in understanding the progress of the U.S housing market, this report doesn’t look well. Furthermore, as long as there won’t be substantial growth in housing starts, the U.S real estate will probably continue to dwindle.
As I have stated in previous posts, there is a supposed lagged (by one day) and negative correlation between the changes in housing starts and daily developments in gold price; i.e. as Housing starts annual rate declines, gold price tends to increase the following day. Therefore, all things being equal, the current decline in gold price might change direction during the day. Finally, this news may also bring down a bit the value of the U.S dollar against major currencies.
Current gold price, short term futures (May 2012 delivery) is traded at $1,643 per t oz. a $7.3 decrease as of 15:57*.
Euros to US dollar exchange rate is currently traded down at 1.3123 a 0.03% decrease as of 15:57*.
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