According to the recent U.S. Census Bureau report regarding the new residential construction statistics for August 2012, the annual rate of housing starts increased while the rate of building permits declined. This report sends a mixed signal as to the developments in the housing market.
Privately owned Housing starts rose in August 2012: the seasonally adjusted annual rate settled at 750,000 compared with the revised rate of 733,000 in July 2012 – this change represents a 2.3% increase; further, the annual rate for August 2012 was also 10.2% above the August 2011 rate of 581,000.
From the housing starts point of view this is a modest positive report.
Alternatively, in August 2012 the seasonally adjusted annual rate of building permits for privately owned housing reached 803,000 – a 1% decrease compared with July’s annual rate of 811,000. Nonetheless, the August 2012 rate was 24.4% above the rate in August 2011.
This news provides a mixed signal for the progress in the U.S housing market as the housing starts rose on a monthly scale and yearly scale; on the other hand building permits fell on a monthly scale. From my perspective, of the two, the housing starts are more important when examining the shifts of the U.S housing market; in such a case, this report shows a little change and perhaps a bit of a growth. But as long as there won’t be substantial rise in the annual rate housing starts, the U.S housing market will continue, at best, to slowly recover. Perhaps the recent FOMC decision to purchase mortgage backed securities in the months to come, may affect the housing market.
As I have pointed out in previous posts, there is a supposed lagged (by one day) and negative correlation between the monthly shifts in housing starts and daily changes in gold price; i.e. as Housing starts annual rate rises, gold price tends to fall the following day. Therefore, all things being equal, the current modest gain in gold price might change direction in the near future and perhaps even tomorrow. Finally, this news may appreciate a bit the value of the U.S dollar against major currencies.
Current gold price, short term futures (October 2012 delivery) is traded at $1,772.5 per t oz. a $1.3 increase as of 17:19*.
Euros to US dollar exchange rate is currently traded up at 1.3066 a 0.15% increase as of 17:19*.
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