According to the latest U.S. Census Bureau report about the new residential construction statistics for May 2012, the annual rate of housing starts declined while the rate of building permits rose. This report sends another mixed signal of the development in the housing market.
Privately owned Housing starts fell in May 2012: the seasonally adjusted annual rate settled at 708,000 compared with the revised up rate of 744,000 in April 2012 – this change represents a 4.8% drop; alternatively, the annual rate for May 2012 was still 28.5% above the May 2011 rate of 551,000.
From the housing starts point of view this isn’t a positive report.
On the other hand, the seasonally adjusted annual rate of building permits for privately owned housing reached in May 2012 780,000 – a 7.9% increase compared with April’s annual rate of 723,000. The May 2012 rate was also 25% above the rate in May 2011.
This news provides a mixed signal for the changes in the U.S housing market as the housing starts decreased on a monthly scale; on the other hand building permits rose on a monthly and yearly scales. In my view, of the two, the housing starts are more important when analyzing the progress of the U.S housing market; in such a case, this report shows a little sign of slowdown. But as long as there won’t be substantial drop in the annual rate housing starts, the U.S housing market will likely to slowly recover.
As I have said in past posts, there is a supposed lagged (by one day) and negative correlation between the monthly changes in housing starts and daily shifts in gold price; i.e. as Housing starts annual rate falls, gold price tends to rise the following day. Therefore, all things being equal, the current rise in gold price might continue its path during the day. Finally, this news may depreciate a bit the value of the U.S dollar against major currencies.
Current gold price, short term futures (July 2012 delivery) is traded at $1,630.1 per t oz. a $3.1 increase as of 14:07*.
Euros to US dollar exchange rate is currently traded slightly up at 1.2638 a 0.49% increase as of 14:07*.
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