Tuesday the United States Census Bureau reported that housing starts hit 1,615,000 for the month of August and housing permits have well 1,728,000. These data lines exceeded expectations and we had slight positive revisions from previous months – overall a good report on all fronts.
I’ve always been aware that monthly housing starts data can be crazy, both positive and negative, so the trend is what matters most. The movement says slow and steady brings sexy back to housing data, and the wild action we’ve seen due to COVID-19 is moderating.
Single-family housing starts have slowed recently, with new home sales moderating and monthly supply rising.
However, a lot of housing data was going to moderate due to the massive distortion COVID-19 created in the data lines. The key is to always know the difference between fundamental data weakness and what comes back to a normal base from an extreme move. That’s why I thought it was vital for me to discuss the fact that the housing data is going to moderate and be careful not to read too much in that moderation.
Sadly, our housing crash brethren sounded the alarm too soon when they saw many housing data lines drop from their recent COVID-19 peaks. This is very common as this sensitive group tends to think of it as Wile Coyote, and every weakness sends our friend waving the sign that says It’s all before you fall off a cliff.