According to the latest U.S. Census Bureau report about the new residential construction statistics for April 2012 there was an increase in housing starts but a decrease in building permits.
Privately owned Housing starts rose in April 2012: the seasonally adjusted annual rate settled at 717,000 compared with 699,000 in March 2012 – this is a 2.6% gain; furthermore, the annual rate for April 2012 was also 29.9% above the April 2011 rate of 552,000.
This is a positive report from the housing starts point of view as there are some signs of progress in the housing starts.
On the other hand, the seasonally adjusted annual rate of building permits for privately owned housing reached in April 2012 715,000 – a 7% decrease compared with March’s annual rate of 769,000. The April 2012 rate was 23.7% above the rate in April 2011.
This news provides a mixed signal for the development of the U.S housing market as the housing starts might have increased on a yearly and monthly scale; on the other hand building permits decreased on a monthly scale but rose on a yearly scales. Since, in my view, of the two, the housing starts are more important in comprehending the progress of the U.S housing market; this report shows a little sign of progress. But as long as there won’t be substantial growth in housing starts, the U.S housing market will likely to continue dwindling.
As I have claimed in past posts, there is a supposed lagged (by one day) and negative correlation between the monthly developments in housing starts and daily changes in gold price; i.e. as Housing starts annual rate rises, gold price tends to decrease the following day. Therefore, all things being equal, the current drop in gold price might continue on its path during the day. Finally, this news may help keeping the value of the U.S dollar against major currencies.
Current gold price, short term futures (June 2012 delivery) is traded at $1,531.3 per t oz. a $25.8 decrease as of 18:54*.
Euros to US dollar exchange rate is currently traded slightly down at 1.2723 a 0.05% decrease as of 18:54*.
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