U.S. Housing Market Data Disappoints; Housing Starts to Lowest Since April 2009
More evidence emerged that the U.S. housing market remains a laggard in the recovery, as demand for new construction continues to struggle to find footing. Housing starts in February declined by 22.5 percent from January, coming in at 475,000, well below the estimated 566,000, according to a Bloomberg News survey. Housing starts advanced by 618,000 in January, growth of 18.5 percent from December. Similarly, building permits for February also declined more than expected, falling by 8.2 percent to 517,000. 570,000 permits were forecasted to have been approved following 563,000 in January. The housing data, coupled with producer prices data from February, initially sent the Greenback lower against the major currencies. However, the Dollar Index has since fallen, to as low as 76.36 following the news.
U.S. Housing Starts: April 2007 to Present
New construction continues to be constrained as a high supply of foreclosed homes continues to weigh on prices and add to already ‘over-stocked’ inventories. The Federal Open Market Committee noted the continued struggles of the housing market, calling the situation “depressed”; the FOMC used this data as evidence to maintain plans to purchase U.S. Treasuries in order to boost growth. The housing market will likely to be depressed until there is a substantial rebound in the jobs market.
Written by Christopher Vecchio, DailyFX Research.
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