Weak data on housing activity continued the series of disappointing macro-releases from the USA. The number of building permits and housing starts declined by more than 10% in February after rising by 10.7% and falling by 5.1%, respectively.
This sharp reversal is probably another manifestation of the extremely adverse weather, which was another significant factor temporarily suppressing economic activity. Optimists might point out that the current downturn is only a correction after the sharp upsurge in figures at the end of last year. But so far, it leaves the data series within the framework of a multi-year growth trend.
This return to the main trend raises questions about the strength of the recent housing boom. The bottom line is that we see a frightening acceleration in house price growth but no material changes in the construction growth pace. This price upsurge almost inevitably will be increasing even further thanks to the support package, as it has done in the past.
The FxPro Analyst Team