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 increased 22.2% in February after plunging 14.5% in January, the Commerce Department said today. The increase was mainly due to a surge in multi-family projects.
Starts were at a 583,000 annual pace last month, more than the 450,000 rate economists had expected to see. January was revised slightly higher to a 480,000 annual rate after the originally estimated 470,000 pace.
Building permits rose less than starts, an indication that future construction could slow. permits increased 3% to a 547,000 annual rate after being forecast to drop to a 500,000 pace. January was revised higher to 477,000 from the previously estimated 466,000.
Construction of single-family homes climbed 1.1% to a 357,000 annual rate. Work on multifamily homes, such as townhouses and apartment buildings, surged to a 226,000 pace from 124,000 in January, led by an 89% surge in the Northeast.
The starts for multi-family dwellings tends to be volatile, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. It actually would have been better to have not seen the 1.1% increase in single family starts because it's likely that inventories will rise as foreclosures increase, putting further downward pressure on prices.
Forex Technical Reaction: S&P futures had been trading relatively flat overnight and were declining by 2.5 points just as the report was released. Futures remained a half point lower afterwards, and the dollar was basically flat.