Single-family permits increased by 3% to a SAAR of 699,000 units in August from 680,000 units in July, above expectation for +1% m/m to 685,000. The sequential improvement is consistent with comments made by TOL (first 4 weeks of August contracts were +16% y/y) and HOV (August sales per community +8% y/y) on August trends.
"We do think August trends could have been potentially affected by the late Labor Day (Aug. '14 had 4 full selling weekends + holiday weekend vs. Aug. '15 with 5 full selling weekends). Regionally, single family permits increased by 6% in both the Northeast and West and 3% in the South, while decreasing 3% in the Midwest. Total permits increased by 4% to 1.170 mln units in August from 1.130 mln units in July, better than our -3% est. to 1.095 mln units and consensus for a 3% increase to 1.155 mln. The volatile 5+ unit activity increased by 4% to 440,000 units (from 422,000 in July), as elevated MF construction activity in the South offset headwinds faced by the Northeast (which we think will persist)", says Credit Suisse.
Single-family starts decreased by 3% in August to a SAAR of 739,000 units vs. 762,000 units in July (which was revised down by 3% from 782,000), above 720,000 estimate. Economists had been expecting some payback this month, given the recent relative outperformance of SF starts vs. SF permits, and would note August releases and July revision closes the majority of this gap (now SF starts are running 6% above permits vs. 2% average). Single-family starts decreased by 20% in the Northeast, 18% in the West, 10% in the Midwest, while increasing 9% in the South. Total starts were -3% sequentially at a SAAR of 1.126 mln units in August from 1.161 mln units in July (revised from 1.206 mln), splitting 1.080 mln estimate and consensus for 1.160 mln. 5+ unit starts decreased by 2% to 381,000 units annualized, with Northeast down 45% m/m though offset by better trends from the West (+37% m/m).
"We continue to expect 2015 total housing starts of 1.08 mln (single-family 695,000) and 8% growth to 1.17 mln in 2016 (SF +9% to 758,000). We are initiating a 2017 est. for total housing starts of 1.310 mln (+12% y/y) in 2017 and single-family housing starts of 871,000 (+15% y/y)"notes Credit Suisse.
