According to the recent U.S. Census Bureau report about the new residential construction statistics for June 2012, the annual rate of housing starts declined while the rate of building permits rose. This report sends a mixed signal of the progress in the housing market.
Privately owned Housing starts rose in June 2012: the seasonally adjusted annual rate settled at 760,000 compared with the revised rate of 711,000 in May 2012 – this change represents a 6.9% increase; further, the annual rate for June 2012 was still 23.6% above the June 2011 rate of 615,000.
From the housing starts point of view this is a positive report.
On the other hand, the seasonally adjusted annual rate of building permits for privately owned housing reached in June 2012 755,000 – a 3.7% decrease compared with May’s annual rate of 784,000. On the other hand, the June 2012 rate was 19.3% above the rate in June 2011.
This news provides a mixed signal for the developments in the U.S housing market as the housing starts rose on a monthly scale and yearly scales; on the other hand building permits declined on a monthly scale. From my perspective, of the two, the housing starts are more important when examining the progress of the U.S housing market; in such a case, this report shows a little sign of progress. But as long as there won’t be substantial increase in the annual rate housing starts, the U.S housing market will continue to only slowly recover.
As I have stated in the past, there is a supposed lagged (by one day) and negative correlation between the monthly changes in housing starts and daily changes in gold price; i.e. as Housing starts annual rate rises, gold price tends to decline the following day. Therefore, all things being equal, the current decline in gold price might continue its direction during the rest of the day 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 (August 2012 delivery) is traded at $1,575.9 per t oz. a $13.6 decrease as of 17:36*.
Euros to US dollar exchange rate is currently traded slightly up at 1.227 a 0.2% decrease as of 17:36*.
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