Housing starts are up 39.2% year over year! This is not a typo, this is another BC Before Coronavirus data that was coming in good. We are going into the AD phase; After Disease stage now.
Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,464,000. This is 5.5 percent (±1.5 percent) below the revised January rate of 1,550,000, but is 13.8 percent (±2.1 percent) above the February 2019 rate of 1,287,000. Single‐family authorizations in February were at a rate of
1,004,000; this is 1.7 percent (±1.4 percent) above the revised January figure of 987,000. Authorizations of units in buildings with five units or more were at a rate of 415,000 in February.
Privately‐owned housing starts in February were at a seasonally adjusted annual rate of 1,599,000. This is 1.5 percent (±12.4 percent)* below the revised January estimate of 1,624,000, but is 39.2 percent (±17.7 percent) above the February 2019 rate of 1,149,000. Single‐family housing starts in February were at a rate of 1,072,000; this is 6.7
percent (±13.9 percent)* above the revised January figure of 1,005,000. The February rate for units in buildings with five units or more was 508,000.
In fact, a lot of economic data was good, BC. However, the short term pain of AD is coming. Some of these data lines will get hit worse than others. Jobless claims are about to have a significant spike as we were working from roughly all-time lows vs. the Civilian labor force. The Speed of the virus is taking away the one thing that the American economy always enjoyed doing, going out, and spending. Even production is being closed down for the safety of workers.
Jobless Claims Vs. The Coronavirus
Purchase application data up 11% YoY, this is 8th straight week of double-digit growth now. This is also working at cycle highs in demand.
Regarding housing right now, I would focus on the purchase application data YoY only. Lockdown protocols can prevent a fluid open house from happening, which means housing will get hit short term in certain areas.
More on that subject here.
Like I have talked about in my past few articles, we are at WWIII vs. the virus, and things aren’t going to get back to normal quickly. I would give it until September 1st, 2020, before the Virus headlines are much more positive than today. This doesn’t mean we are in lockdown protocols until then. However, defeating this virus comes in stages, and right now, we are at the start of the hardest phase with lockdown protocols in place. The most important aspect is the health aspect and making sure our hospitals don’t get overrun, so we need to take some pain here. WWII, we asked Americans to die fighting, and now we are asking Americans to social distance from others for a short time. We can do this as a country together!
Whatever it takes on the fiscal, monetary, and humanity side, this is all of us against this agent of the Devil. This is one event in recent history where one thing is trying to break us all, and I promise you, in the end, we will defeat this demon.
One last thing, this recent move higher in housing starts is a significant deviation from the 6 months moving average. I do expect the builders to either shut down production or slow it down due to the virus to protect their workers.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.