U.S. new housing starts likely to trend higher in months ahead

U.S. housing starts are expected to have increased in August. In the prior month, the starts rose slightly. The number of new units started during the month rose 0.9 percent to a 1.168-million unit pace, an unspectacular, yet strong again. Both single family and multifamily starts rose 0.9 percent and 0.7 percent, respectively. While July’s reading came in under expectations, total starts are 6.2 percent ahead of last year on a year-to-date basis, noted Wells Fargo in a research report.

In spite of new starts declining slightly below expectations, builders continue to see solid buyer demand. Increasing material costs and labor have been a major headwind to homebuilding in 2018, resulting in projects to be delayed or cancelled totally as they no longer pencil out. Nevertheless, material prices tend to be lower in the second half of 2018, which might permit some of the stalled projects to restart.

“Our expectations for new residential building have been scaled back recently due to these mounting cost pressures, but we still anticipate new housing starts to trend higher in coming months”, added Wells Fargo.

At 13:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -70.9314. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex