Release Explanation: This report covers the number of new residential Starts and residential Building Permits issued each month, reported on an annualized basis. The reports act as leading indicators on housing market sentiment and the overall economy because they have an important influence on new & existing home sales, employment, retail sales, durable goods orders and GDP as new additions are fitted out with fixtures and fittings. A currency will eventually be affected by these numbers as they are the first phase in the home construction process.
Trade Desk Thoughts: Housing starts fell to a record low in January as the economy slowed and credit remained difficult to get.
Starts fell 17% to a 466,000 annual rate, the Commerce Department said. Building permits, a measure of new construction, dropped 4.8% to 521,000.
Starts are continuing to make a necessary inventory adjustment, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. Builders for now will continue to concentrate on selling the inventory they already have.
Construction of single-family homes decreased 12% to a 347,000 rate annual rate, while multifamily starts declined 28% to an annual rate of 119,000. Starts declined in all four regions, led by a 43% plunge in the Northeast and a 29% drop in the Midwest.
In December, new-home sales fell to a record low 331,000 annual pace, which means it would take 12.0 months to clear the present inventory, more than twice the five-to-six months supply the National Association of Realtors has said is consistent with a stable market.
Forex technical Reaction: S&P futures were recently improving and were up 5.5 points (0.70%). The dollar was near session highs against the euro and pound and at the session low against the yen. The dollar gained overnight against the euro, yen and pound, but declined against Australia's dollar.
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