Building Permits, Housing Starts Signal Mixed Housing Market

Building Permits tracks the change in government issued new building permits from the prior month. Housing starts tracks the change in the number of new residential buildings that has construction during the month. Both signal to the health of the US housing market.
Larger-than-expected increases in housing starts and building permits increased household income and suggest in turn an economic expansion, and visa versa.
According to the US Department of Housing and Urban Development, privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 715,000, lower than the 600 730,000. This is 7.0 percent below the revised October rate of 769,000, but is 23.7 percent above the revised April 2011 600 of 578,000.

! Loonie Falls Despite Surge in April Housing Starts To Fastest Pace Since 2007

THE TAKEAWAY: [Canadian housing starts accelerated in April for fifth straight month to fastest pace since September 2007] > [Continuing strength in housing market] > [CAD weakens vs. USD]
Housing starts in Canada unexpectedly accelerated in April for the fifth straight month to its fastest pace since September 2007. The Canada Mortgage and Housing Corporation reported a large jump to 244,900 housing starts at a seasonally adjusted annual pace in April, while March’s figure was revised slightly downwards to 215,200 from 215,600 originally reported. The median forecast of 21 economists surveyed by Bloomberg News had called for a slowdown to 204,000 housing starts in April. New starts soared by 28.8 percent in April from a year ago, compared with March’s year-on-year rate of 16.7 percent.
The pickup in housing starts in April was led by a surge in multi-family homes in urban areas, which recorded a 27.4 percent gain to 158,500 new starts. Meanwhile, housing starts in rural areas contracted by 19.0 percent from a month ago, reversing the 10 percent gain in March.
April's housing starts data follows yesterday’s news that the number of residential building permits approved had declined by 1.3 percent in March. This could indicate that we may see slight moderation in the coming months in the recent strength shown by the Canadian housing market, in what some analysts think is a housing bubble.
USDCAD 1-minute Chart: May 8, 2012

Chart created using Strategy Trader – Prepared by Tzu-Wen Chen
Despite the stronger-than-expected print, the Canadian dollar tumbled against the U.S. dollar in the minutes following the data release. The loonie fell as much as 20 pips in the first 15 minutes from pre-announcement levels, and despite a slight retracement, continued to trade weaker at C$0.9972 against the greenback at the time of this report.

||| Sterling Strong: highlights of data housing good Continental weakness

02 May 2012 08: 21 GMT  THE TAKEAWAY: Better than expected UK housing data props Sterling against the Euro, with less than ideal numbers from the continent slowing down the single currencyMortgage approvals in the United Kingdom rose during March, sparking a bout of strength in the Pound against the Euro and US Dollar. 49,900 mortgages were approved versus the 48,000 approvals forecasted by a team of economists.
Sterling strengthened against the beleaguered Euro as positive the UK data contrasted with less than ideal numbers from the continent. EUR/GBP fell to fresh yearly intraday lows.
Although the data encouraged some market participants, especially since in coincided with a better than expected PMI manufacturing out of the UK, the outlook for policymakers remains bleak.A GDP contraction in 2012's first quarter has pushed the UK into its first double-dip recession since the 1970s, and pressure on UK officials is expected to increase. UK PM David Cameron has faced criticism for promoting austerity instead of stimulus andthe Bank of England recently said growth could contract because of weak construction during the Jubilee holiday season.