US: Weak housing starts data – Nomura

Analysts at Nomura note that US housing starts fell 12.3% m-o-m to 1173k saar in June, below expectations (Nomura: 1290k, Consensus: 1320k), from downwardly revised 1337k saar in May.

Key Quotes

“While we expected slowdown in housing starts in June given declines in recent permit data, the decline was sharper than we had anticipated.”

“Housing permits were down 2.2% m-o-m to 1273k, below expectations (Nomura: 1318k, Consensus: 1330k), marking the third consecutive m-o-m fall. Continued declines in multifamily housing permits appear consistent with ongoing softening in the multifamily housing sector and raise downside risk to residential investment. While month-to-month changes in starts and permits can be volatile, we expect continued gradual improvement in housing starts.”

“GDP tracking update: Housing starts in June were weaker than we expected and backward revisions were modestly negative. However, after rounding, our Q2 real GDP tracking estimate remains at 4.6% q-o-q saar.”