The U.S. June housing report undershot estimates
The U.S. June housing report undershot estimates with downside surprises via both June weakness and prior downward revisions for all the major aggregates. Housing starts fell -0.9% in June, though starts under construction rose 0.5%, while permits fell -6.1%. Analysts saw a 3.5% June single family bounce but a -9.2% multi-family drop that largely reversed the opposite divergence in May. Analysts saw big rebounds in the northeast and midwest but declines in the south and west, hence reversing the May pattern. Completions fell -4.8% in June, as analysts further unwound the Q1 surge. Analysts saw revisions for permits that extend back to 2013. Analysts saw a 17.4% growth rate for starts in Q2 but a -8.2% rate for permits, as starts played catch-up with the higher permits trajectory, alongside a -6.5% growth rate for starts under construction in Q2. Analysts expect Q2 GDP growth of 1.8%, with a -2.0% (was -1.4%) Q2 growth rate in "real" residential construction after the same -2.0% figure in Q1. Analysts're seeing only a modest second wind for most of the housing sector data, and with little boost yet for the important construction spending data that drive the residential component of GDP. The housing sector is benefiting from the drop in mortgage rates with the Fed's pivot at the start of 2019, and ensuing dovish shift through the June FOMC meeting. Yet, the trajectory for the housing sector remains anemic.