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U.S. Housing Starts Fell 9% in September

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U.S. Housing Starts Fell 9% in September - investorsking.com
  • U.S. Housing Starts Fell 9% in September

Housing starts fell for the second straight month in September, but builders received more permits, a sign residential construction could pick up in the coming months.

Building permits issued for privately owned housing units rose 6.3% in September from the prior month to a seasonally adjusted annual rate of 1.225 million, the Commerce Department said Wednesday.

Permits for single-family homes, about 60% of all permits, rose to a rate of 739,000, up 0.4% last month.

Housing starts fell 9.0% in September to an annual rate of 1.047 million, as starts on multifamily buildings dropped sharply. But single-family starts continued to climb, rising 8.1% in September to a rate of 783,000.

Economists surveyed had expected overall September permits to rise to a 1.17 million annual rate and starts to rebound to a 1.18 million pace. Construction typically begins a month or two after a permit is issued.

Monthly housing figures are often choppy and can be subject to large revisions. August permits were revised up to a 1.152 million rate from 1.139 million. August starts were revised to 1.150 million from 1.142 million.

September’s rise in permits, based on a survey of local governments, had a margin of error of 1.9 percentage points. Last month’s decline in starts, based on a survey of builders and homeowners, came with a margin of error of 9.2 percentage points.

Through the first nine months of the year, permits were up 0.6% compared with the same period in 2015, though that mainly reflected a drop in permits for buildings with five or more units. Single-family permits were up 8.1%, year to date.

Starts were up 3.7% through September, and single-family starts were up 8.6% through the nine months.

Both permits and starts fell sharply in the years leading up to the recession, as the housing crisis took hold, and remained near all-time low levels for two years after the recession ended. The construction gauges have rebounded since 2011, but the pace of gains slowed over the past year.

Relatively stronger momentum for single-family home construction suggests that builders are responding to rising prices and steady demand for that segment, while construction of larger multifamily projects is slowing.

Sales of existing homes, about 90% of the housing market, have grown fairly strongly this year, reaching a postrecession peak in June, according to the National Association of Realtors. Steady job growth, wage gains and low interest rates on mortgages have supported home buying. But low inventory of new and existing homes is driving up prices, putting a purchase out of reach of some would-be buyers.

A National Association of Home Builders survey this week showed builders are still fairly confident in the single-family housing market for new homes. The gauge of home-builder sentiment slipped from a year-high of 65 to 63 in October, but still stood at the second-highest level of 2016.

The Realtors group will release data on existing-home sales for September on Thursday. The Commerce Department’s September report on new-home sales is due out Oct. 26.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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