Following their violent swings in February and March (revised up to 189,546 units) housing starts were much less volatile in April. In fact a 4.1 percent monthly drop to a seasonally adjusted annualised rate of 181,814 units was broadly in line with market expectations.
The overall monthly decline reflected a 14.2 percent slide in urban multiples to 107,216 units, partially offset by an 11.4 percent jump in singles to 58,229 units. Regionally there were falls in the Prairies and Quebec and rises in Atlantic and British Columbia. Ontario was essentially flat.
Rural starts were estimated at 16,369 units, up from March's 12,397 unit rate.
Just yesterday March building permits recorded an 11.6 percent increase versus the end of last quarter, their first rise in three month. Taken together with the relative stability of starts last month, the signs are that the downward trend in housing market activity may be beginning to slow.
Housing starts is the annualized number of new residential buildings that began construction during the previous month.
Housing starts are a leading indicator of economic health because building construction produces a wide-reaching ripple effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy.
Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic "ripple effect" can be substantial. Since the economic backdrop is the most pervasive influence on financial markets, housing starts have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the housing starts data carry valuable clues for the stocks of home builders, mortgage lenders, and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.
CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.