Fall in US Housing Starts and Permits

U.S. housing starts declined a further 6.2% M/M in August, falling to 895K from 954K in July. The decline was much worse that the drop to 950K expected by the markets, and comes on the heels of the 12.4% M/M drop in July. This is now the lowest number of new residential construction since January 1991.

Building permits approved during the month were also lower, falling 8.9% M/M to 854K, following the massive 17.7% M/M drop to 937K in July. Market consensus was for a drop to 928K.

On the whole, the report highlights the distress that the U.S. housing market continues to face. However, with the rescue of the two major U.S. GSEs appearing to have provided some semblance of normalcy in the U.S. mortgage insurance and securitisation business, there is perhaps the possibility that these dramatic declines in starts and permits in the past few months may not continue indefinitely.