Housing Starts Data Better than Headline Suggests in October 2014

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Housing Starts

  • October Housing Starts were 1.009M (saar) vs. (E) 1.028M (saar).

Takeaway

The housing starts number was a miss on the headline but the details were actually good.

As always with housing starts, the two key numbers are single family housing starts and single family building permits (which led starts by 3-6 months).

Single family “starts” rose 4.2% in October and the September number was revised higher to 4.2%. Also, single family permits rose 1.4% in October.

The drop in the headline number was due to multi-family housing units declining 15.4% in October. But, the reason we look at this number is to get a gauge of the single family housing market, and yesterday’s data implied that demand for housing (specifically new homes) remains very healthy, and nothing in the number would make us doubt the housing recovery.

This was an excerpt from the Economic Section of today’s edition of the Sevens Report. To continue reading today’s Report simply sign up for a No-Risk Free Trial on the right hand side of this page.

FOMC Minutes Analysis

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FOMC Minutes

The FOMC minutes didn’t contain many surprises, but on balance they did confirm that the FOMC is more committed to normalizing policy than the market thought before the October meeting.

Yesterday I focused on the difference between market-based and sentiment-based inflation expectations, and so too did the Fed in its minutes. The takeaway is that “most” Fed officials looked at the declines in market-based measures of inflation expectations as “noise” rather than a rising deflation threat.

The FOMC also cited that sentiment-based indicators of inflation expectations remain stable. While inflation likely would decline in the near term thanks to commodity prices, the committee remained confident they would reach their 2% goal sooner than later.

I know this is somewhat tedious, but it’s important, because the bottom line is that, as long as sentiment-based inflation expectations remain stable, the drop in market-based inflation expectations will not make the Fed more dovish.

This was an excerpt from today’s Sevens Report. To continue reading today’s report, simply sign up for a Free Trial on the right hand side of this page.

 

Sevens Report 11.20.14

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Sevens Report 11.20.14NOW