December US housing starts surge past forecasts
By Alexander Bueso
Date: Friday 17 Jan 2020
(Sharecast News) - Homebuilding activity in the States blew the doors of economists' forecasts in December, but economists were quick to point out that such strength was just not sustainable and some of the underlying data appeared to point in that direction too.
According to the Department of Commerce, housing starts jumped by 16.9% month-on-month, pushing the annualised rate of starts to 1.608m for a 40.8% surge year-on-year (consensus: 1,380m).
Ian Shepherdson at Pantheon Macroeconomics labelled the data "spectacular but clearly unsustainable".
A 30% leap in so-called multifamily starts to 536,000 - a 33-year high - was partly responsible for the bumper headline number, together with warm weather, he added.
Nonetheless, starts for single family homes, which tend to be less volatile than those for multi-family starts, were also up strongly, rising by 11.2% to 1,055m.
On the flip-side, building permits, which are much less weather sensitive, disappointed, increasing by 3.9% to 1.416m (consensus: 1.469m), Shepherdson said.
In comparison to the same month one year ago, permits were 5.8% higher.
"Activity can't be sustained at this level, and a hefty correction in January is a good bet [...] But the trends are increasing, and we expect further gains this year, given the rising trend in new home sales."
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