Davy Research |
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Construction and Housebuilding
US housing starts fall a little short of expectations in July but housing permits at a near-four year high
17 August 2012
Flor O'Donoghue
FACTS: US housing starts were estimated at a seasonally adjusted annualised rate of 746,000 in July.
ANALYSIS: Starts in July slipped slightly from the annualised rate in June (754,000) and also fell a little short of what was expected (757,000). That said, July's annualised rate was comfortably above the rate this time last year (614,000). This highlights the extent of the improvement in housing starts in the past year or so. With permits in July hitting a near four-year high (at 812,000 annualised), it is likely that the momentum in housing starts will continue.
DAVY VIEW: The improvement in the US housing market is good news for CRH and Wolseley in particular. It is also positive to some extent for the likes of Wienerberger and Saint-Gobain. While the outlook for the non-residential sector is less positive, there is no reason why the upward swing in housing cannot continue. Housing starts, for example, remain substantially below both the long-term average of c.1.3m units per annum and household formation rates.