By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

Sign up to receive email updates as new reports are released.

November Housing Starts: All in All, Not Bad

The economic data so far this month have been uniformly strong, certainly stronger than we had expected. Today’s housing-starts release did not quite break that skein. Yes, headline starts were down 1.6%, and single-family starts were down 5.4%. However, both of those series were coming off very sharp increases announced a month ago.

In fact, all of last month’s gains occurred in the critical single-family-starts component, and these were actually revised upward with today’s news. The single-family data are summarized in the accompanying chart. As seen there, even with the November decline, single-family starts are still well above the prevailing levels of the last two years.

…And that is actually the suspicious part. As the chart makes clear, there has not as yet been any accompanying increase in single-family permits to indicate that the higher starts levels will be sustained. The recent increases look very much like those of late-2013—gains that turned out to be a flash in the pan.

Still, there is nothing in the recent housing data to suggest any downside risks there. Single-family activity is at worst stable, as it has been for the last two years. Multi-family activity stabilized early this year, after having risen through 2013, but here too, there are no downside indications to provide worry signs. Finally, the data by region look much the same: stable in the Northeast, Midwest, and West, with sporadic (temporary?) gains in the South.

So, we have a probably stable level of homebuilding alongside recent improvements in payroll job growth, retail sales, and manufacturing production. Once again, on balance, the data have been better lately. We’ll have to see whether that improvement lasts and whether it finally carries over to financial market pricing. For now, both Treasury bond yields and stock prices are lower on the month despite the news.

Single-Family Homebuilding
November Single-Family Home Sales

Source: Census Bureau. As of 30 Nov 14

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 41 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

Sign up to receive email updates as new reports are released.

© Western Asset Management Company, LLC 2018. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK and EEA countries as defined by the FCA or MiFID II rules.