U.S Housing Starts Rose by 3.6% in October 2012

According to the recent U.S. Census Bureau report referring the new residential construction statistics for October 2012, the annual rate of housing starts rose again while rate of building permits declined. This report sends a mixed signal as to the developments in the housing market.

Privately owned Housing starts rose again in October 2012: the seasonally adjusted annual rate settled at 894,000 compared with the revised rate of 863,000 in September 2012 – this change represents a 3.6% increase; further, the annual rate for October 2012 was also 41.9% above the October 2011 rate of 630,000.

From the housing starts point of view this is a strong positive report.

Conversely, in October the seasonally adjusted annual rate of building permits for privately owned housing reached 866,000 – a 2.7% drop compared with September’s annual rate of 890,000. The October 2012 rate was also 29.8% above the rate in October 2011.

This news provides a mixed signal for the progress in the U.S housing market as the housing starts rose while the building permits declined on a monthly scale and yearly scale. From my perspective, of the two, the housing starts are more important when examining the shifts of the U.S housing market. If this trend will continue, it could lower the chances of the Fed intervening again the US money market and introduce additional stimulus in the near future.

As I have pointed out previously, 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 fall the following day. Therefore, all things being equal, the current decline in gold price might continue tomorrow. Finally, this news may slightly appreciate the value of the U.S dollar against major currencies.

Current gold price, short term futures (December 2012 delivery) is traded at $1,732.3 per t oz. a $2.1 decrease as of 15:28*.

Euros to US dollar exchange rate is currently traded down at 1.2808 a 0.05% decrease as of 15:31*.

(* GMT)

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