Highlights
Housing starts look positive in September from August but not after taking into account a downward revision to the prior month. Housing starts in September rose 0.5 percent, following a revised 1.0 percent decline in August. The September pace of 0.590 million units annualized was down 28.2 percent year-on-year and fell short of the consensus forecast for 0.615 million units. Importantly, August was revised down from 0.598 million units to 0.587 million units annualized. The advance in September was led by the single-family component which increased 3.9 percent after dropping 4.7 percent the month before. In contrast, the multifamily component fell 15.2 percent after rising 20.7 percent in August.

By region, the September decline in starts was led by an 8.8 percent fall in the West with decreases also seen in the Northeast, down 5.5 percent, and the Midwest, down 1.8 percent. Starts in the South rebounded 7.1 percent.

Housing permits point toward a pause or temporary leveling in the housing recovery, slipping 1.2 percent, following a 2.8 percent rise in August. Permits in the latest month stood at an annualized 0.573 million units and were down 28.9 percent on a year-ago basis.

Markets appear to have gotten a little too optimistic about the upward trend in starts continuing without any bumps in the road. Homebuilders appear to recognize that supply of homes on the market is still high and that a strong recovery in new construction is not yet called for. While the downward revision to August may be a little disappointing to traders, the net result through September is still a nice, moderate recovery from the recession bottom.

On the release, equity futures dipped from earlier highs but were still up net on Caterpillar's very positive results. Treasury yields eased and with additional help from lower-than-expected headline and core PPI numbers.

Market Consensus Before Announcement
Housing starts in August rose 1.5 percent, to an annualized pace of 0.598 million units. The rebound in August was led by the multifamily component which jumped 25.3 percent after plunging 15.2 percent the month before. However, the single-family component slipped 3.0 percent after rising 3.3 percent in July. Overall, however, starts have risen significantly since recession bottom. Total starts are up 24.8 percent in August from the recession low of 0.479 million units in April of this year. Looking ahead, the upward trend is likely to be choppy given the heavy supply of unsold houses on the market and continued high unemployment.

2009 Release Schedule

Released On: 1/22 2/18 3/17 4/16 5/19 6/16 7/17 8/18 9/17 10/20 11/18 12/16 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov