Preview: Due June 16 - U.S. May Housing Starts and Permits - Slightly lower on volatile multiples
We look for May housing starts and permits to both see modest declines, with starts down by 2.4% to 1.43m and permits down by 0.2% to 1.42m. The detail is likely to see gains in the single family sector outweighed by corrections lower in multiples.
Housing trends have no clear direction though new home sales saw a below trend month in April, which argues against a strong rise in May starts. May’s non-farm payroll showed aggregate hours worked in construction unchanged and employment in residential construction marginally lower.
We expect gains of 2.2% in single starts and 2.1% in single permits. Single starts would be correcting from a 9.0% decline in April which followed a 10.7% increase in March. Single permits would be following two straight declines, by 2.6% in April and 3.7% in March. Single permits trend is fairly flat suggesting only modest upside scope in single starts.
The volatile multiples series look due for a correction lower, which we expect to outweigh the gains in singles. For multiple starts we expect a fall of 10.3% after a 10.3% increase in April that extended a 14.7% rise in March. For multiple permits we expect a 7.0% decline. That will not fully erase a 21.8% increase in April that followed a 23.4% fall in March. Multiple and overall permits have both alternated direction in each of the last five months. We look for this to continue in May.
