Building Permits Surged while Housing Starts Retreated in May; USD Tumbles
THE TAKEAWAY:U.S. Building Permits Rose to 780 Thousand while Housing Starts Fell to 708 Thousand> Mixed Signs on Housing Market Condition > U.S. Dollar Weaken versus Most of Its Major Peers
The U.S. Consensus Bureau and the Department of Housing and Urban Development jointly reported today that building permits hit forty-four month high in May while privately-owned dwelling starts disappointingly tumbled in the month, sending opposite signals on the housing market that has been struggling since mortgage crisis in 2008.
New permits for building homes, a gauge of future construction, surprisingly climbed 7.9 percent to a seasonally adjusted annual rate of 780 thousand in May, the highest level since August 2008. The figure came in well above the consensus projection of 730 thousand from Bloomberg News survey. Last month’s housing permits were boosted by a 4.0 percent rise in approvals for single-family home projects. Meanwhile, April figure was upwardly revised to 723 thousand from 715 thousand. The strong number in new permits provides further evidence of improving demand on housing. Economists predicted that home building would add to economic growth this year for the first time since 2005.
Separately, privately-owned housing starts unexpectedly declined 4.8 percent to a seasonally adjusted annual pace of 708 thousand in October after climbing to a revised 744 thousand in September. The figure is contrast with the median forecasts as seventy-three economists polled by Bloomberg had called for a gain of 1.0 percent to 730 thousands. From a year prior, starts advanced 28.5 percent, though. Housing starts sharply fell in May as a deterioration in the construction of apartments overwhelmed a rise in single-family starts.
Chart created using Strategy Trader – Prepared by Trang Nguyen
The U.S. dollar loses its footing versus most of its major trading partners ahead of the opening bell on Wall Street due to the shift on risk sentiment. The reserve currency transitorily pared its losses against its peers in the minutes following the housing report. As can be seen from the 1-minute EURUSD chart above, the greenback hiked 15 pips against the euro from 1.2620 to 1.2605. Nonetheless, the initial reaction was quickly corrected after fifteen minutes as investors increasingly turned bearish on the greenback. At the time this report was written, the dollar extends its decline to 1.2640 against the single currency.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.