US: Housing starts continue to swing in December – Natixis

Analysts at Natixis note that US housing starts continued to experience unusual volatility in December with a bigger than expected rebound (+11.3% MoM to 1226K units annualized) solely driven by a 57% increase in multifamily starts and revisions of past months data.

Key Quotes

“Nevertheless, the trend remains moderately upward and we expect the recovery in the housing sector to continue in 2017 even though rates are heading higher.”

“Housing starts rebounded more than expected in December with a double digit monthly increase (+11.3%) to reach 1226K units annualized, higher than expectations (consensus: 1188K / Natixis: 1160K). Starts were revised upward in November but slightly lower in October. The rebound was solely driven by volatile multifamily family units (+57.3%) while single family units declined once again (-4.0%). Housing permits (a leading indicator) stabilized at 1210K as the rise in single family permits was offset by a decline in multifamily permits.”

“All in all, report surprised on the upside but one should keep in mind that housing starts have been more volatile than usual with double digit swings (while the standard deviation is close to 8% MoM). Looking through this volatility the trend remains slightly positive, with for the moment little impact from rising rates. We therefore expect the construction sector to keep improving this year.”