THE BASIS POINT

Fundamentals 7/19: Housing Starts Better But Still Low

Housing
-Housing Starts (annualized): 629k June vs. 549k May, highest since Jan.
-Housing Permits (annualized): 624k June vs. 609k May
-Homebuilder confidence flat in June (from 7/18)
-Graphs below puts Starts/Permits in perspective
-There must be 1.5m Housing Starts a year to keep pace with population growth assuming that the number of people per household remains constant. Housing Starts may also be restrained if owners conclude that a bottom has been reached and decide to list their properties. Motivation for Housing Starts remains clouded by shadow inventory, declining values and tougher mortgage lending standards. If we have more Housing Starts and more listings, then prices may drop unless demand increases.

Consumer Spending
-Redbook Store Sales Year/Year: +3.8 %, previous +5.4%
-ISCS Goldman Store Sales Week/Week: +0.4 %. Year/Year +4.5%