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Housing starts have performed below expectations in August, signaling lesser construction of apartments. This does not bode well for the broader economy because the housing industry is one of the few ignitions it has in the corona-infested 2020.
Residential starts have come down by 5.1% compared to July, says a government report. Bloomberg had anticipated 1.49 million but all we have managed to get in August is 1.42 million.
Fewer permits, to the tune of 0.9%, have been granted in August for multifamily homes. July’s surge of 17.9% was a first of its kind for over 12 years.
Jennifer Lee, BMO Capital Markets’s Senior Economist, believes that August’s poor performance “barely dents the massive increases that were racked up over the past three months. And note that the gap between starts and permits is positive again, pointing to more ground-building work (literally) ahead.”
The retail sales report furnished by the government reveals the upshot of the recent good performance of housing. Furniture and home furnishing outlets have seen 3.8% more business come through in August. The building materials stores have also seen their business peak by 15.4%, says the Commerce Department data. Although, any further fragility in the broader economy is likely to hamper real estate, too.