FXstreet.com (Barcelona) - After October's promising pick up in housing construction, in November, both housing starts and building permits have posted declines compared to the previous month, according to data released by the US Census Bureau.
Starts of new houses have decreased in November by 3.7% to an annual rate of 1.187 million houses, from the revised 1,232,0million houses in October, and 24.2% below the 1.565 million in November 2006. The decline, nevertheless, has not been as steep as the 5.7% advanced by market analysts.
One of the keys of the decline, according to Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd, has been the strong decrease on single family houses, which could not be offset by the weak increase on multi-family starts: The headline starts number was flattered by a small rise in multi-family starts; the key single-family number dropped 5.4% to a 16-year low of 0.829M.
Building permits, a gauge observed to assess future trends in the housing construction, has declined 1.5% to 1,152 million annual rate from the 1.170 million annual rate posted in October, the low level of building permits, according to Shepherdson projects a grim outlook for the ousing market and its impact upon the countries GDP: Permits continue to plunge too, so there is no end in sight to the drop in starts. The accelerating drop in starts means that the direct impact of the housing crash on GDP will be bigger in Q4 than in Q3. With foreign trade and inventories also likely to be much less supportive of growth, and consumption slowing, we look for GDP growth of only about 1%.