Housing Starts Rise to Highest Level in 8 Months

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Aug. 19 (Bloomberg) -- Metrostudy Chief Economist Brad Hunter and Bloomberg's Mike Mckee discuss what Home Depot's rising sales indicate about the housing market and housing starts. They speak on “In The Loop.” (Source: Bloomberg)

I always think if more people are going to home depot, fewer people are going to be out buying homes.

Maybe they are picking up their own for a sale.

What does it mean for you?

He could mean either one.

We track an index we created, the remodeling index.

What it shows is an increase in the modeling and at -- restoration of the homes.

Part of that is people buying homes and fixing them up and part of that is people saying, i will stay in the home i have got for a while and keep on maintaining it and making it at her.

-- better.

Home depot, i always like to look at it and know people out there -- i spent a lot of time myself on home depot.

They always do well in the second quarter.

People are starting their spring cleanup fixup garden planting, and they hire a lot of extra people in that quarter.

It does not necessarily give you -- you do not seasonally adjust corporate earnings.

It does not give you a great picture of how the housing industry is doing.

We have seen the housing industry is a bit little bit but housing starts are still only about half of what they were at the peak in 2006-2008. rather than building a new house, you are fixing the deck at your own house or installing a new bathroom or whatever it may be.

Are the home depot results so good that it changes your mind or are they just confirming a fairly optimistic outlook?

It is a fairly optimistic outlook either way you slice it.

We have had a lot of weakness in the new home market and a new home business -- the new home business over the past year.

Part of that has been to sticker shock, builders got ahead of themselves in terms of home price.

It created a frenzy and that is what caused the weakness happening all year this year.

People had just pulled forward their demand and we are seeing a hangover from that.

Household will increase in the new job growth and that will make for a good rest of the second half and on into 2015 for the new home side.

The best cure for a hangover is to build new houses.

We will see in 30 seconds -- five seconds whether they are doing that.

I am used to the data from 2008-2000 9-2010, anything.

We're getting breaking headlines across the bloomberg terminal.

What are you seeing?

It looks like in terms of the consumer price index it is exactly as forecast coming in, up.

Up 2/10, meaning the annual rate goes down a little bit.

Two percent, 1.9% and that will keep people on the sidelines in terms of the fed.

The housing starts number is particularly good.

15.7%. the forecast was for a .1%. we had a drop -- 8.1%. we had a drop.

1,093,000 on an annual basis.

That is nothing compared to the days you and i -- it is nowhere like 1.7 million and 1.8 million.

It has been a while since we have seen these kinds of numbers.

There is particularly good news.

Before the numbers came out, you had a way you could really get the numbers to be good for the markets and we got that.

Strong housing, an indication the economy is picking up, which will tell investors perhaps the fed will not be jumping in here.

Janet yellen sees no reason to cool down inflation.

If she sees no inflation, as opposed to the average american, who probably sees a lot more inflation than janet yellen does.

The housing data is much better than we are looking for.

We have seen them alternate.

We get strong growth.

29% gain in apartment construction.

That did not take away from single-family.

You have gotten steadily more optimistic when it comes to employment and housing.

What is your take on the numbers?

We are up over one million for the first time in recent memory.

Definitely much better than we were looking for.

It is right in line with my forecast.

When last month's numbers came out, it showed production starts in june and in particular, when that release on the census bureau said, on the south, down 29.6%, the number will get revised upward.

Or there will be a big jump up in the next month's number.

It does not surprise me.

The steady-state level of housing starts right now is about one million.

It will go up next year.

We will have an 18% increase the numbers that came out from the census last month did not make sense vis-a®-vis the numbers we track.

We literally drive the distance from here to the moon every quarter, counting housing starts.

In doing so, we are able to see the breakdown in the south.

The census bureau says the south but we track charlotte, atlanta, and so on, florida, texas, those markets were up, according to our numbers, through midyear.

It did not wash.

This will be one of those little mysteries to look at.

Down in june, in july, up 29%. all of that decline was payback and more.

Maybe you get a net gain of three percent over the month.

Statistical noise.

I think the census bureau was working with a tiny example.

They are working off working permits and surveys.

It is not nearly as robust as our data set.

Actually looking for when the foundation -- 100% of the subdivisions we recover in the country.

We have a clear and more gradual or picture.

The picture is, the numbers generation really did not happen.

A quick question.

[indiscernible] the midwest in july, down 25%. is that real were likely or another statistical noise?

It is a bit of statistical noise as well.

You look in our midyear numbers.

You are showing 87% increase quarter on quarter in chicago.

That is comparing second quarter to second quarter a year ago.

Manufacturing is doing a little better.

A depressed time.

It is easy to get percentage increase.

We look around at the rest of the region of the country.

Manufacturing is slowly starting to come back and i think that is a positive sign.

I'm surprised to see that number.

This text has been automatically generated. It may not be 100% accurate.

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