Announced this morning, Housing Starts were 1,428,000 in July, well above expectations and a 5.2% increase from the previous month. In addition, Building Permits were 1,354,000 in July, less than expected, and a -2.8% decrease from the previous month. Meanwhile, retailer Home Depot announced results this morning that were slightly below expectations “as customers engaged more broadly in smaller home improvement projects” per comments from management; but the company reiterated their guidance for the full year.
Overall, an upside surprise in housing starts coupled with a downside miss in building permits. These results highlight the mixed picture of the housing market in today’s economic environment. As the Federal Reserve continues to keep interest rates steady, given the uncertain impacts of tariffs, it has hurt industries most sensitive to interest rates this year, including housing. Home Depot’s results underscore the difficult environment as well.
Even though housing is only 4% of GDP, its activities are linked to other areas of the economy as individuals employed in construction and manufacturing that support the industry tend to spend money in the economy. Given this dynamic, the outlook for housing and the consumer will be key points to watch as the Federal Reserve considers policy in the coming weeks.
In all, the 10-year US Treasury yield ticks lower this morning and equity futures are mixed as we head into the market open.
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