According to the latest U.S. Census Bureau report regarding the new residential construction statistics for July 2012, the annual rate of housing starts decreased while the rate of building permits increased. This report sends a mixed signal as to the progress in the housing market.
Privately owned Housing starts declined in July 2012: the seasonally adjusted annual rate settled at 746,000 compared with the revised rate of 754,000 in June 2012 – this change represents a 1.1% decrease; on the other hand, the annual rate for July 2012 was still 21.5% above the July 2011 rate of 614,000.
From the housing starts point of view this is a negative report.
Alternatively, in July 2012 the seasonally adjusted annual rate of building permits for privately owned housing reached 812,000 – a 6.8% increase compared with June’s annual rate of 760,000. Further, the June 2012 rate was 29.5% above the rate in July 2011.
This news provides a mixed signal for the changes in the U.S housing market as the housing starts fell on a monthly scale; on the other hand building permits rose on a monthly scale and yearly 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 change and perhaps a bit of a slowdown. 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.
As I have pointed out 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 falls, gold price tends to rise the following day. Therefore, all things being equal, the current rise in gold price might continue during the rest of the day and perhaps even tomorrow. Finally, this news may depreciate a bit the value of the U.S dollar against major currencies.
Current gold price, short term futures (September 2012 delivery) is traded at $1,619.0 per t oz. a $12.4 increase as of 16:11*.
Euros to US dollar exchange rate is currently traded up at 1.2358 a 0.55% increase as of 16:11*.
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