Housing Starts for July-2014 were released today and delivered a positive surprise to the market with actual starts @ 1.093mm vs. consensus forecasts @ 0.963mm and prior month @ 0.945mm. Housing is clearly making a comeback as the number of permit applications jumped almost 80k to 1.052mm and the reality begins to bite real estate investors that mortgage rates could start to increase as the Fed reduces its portfolio exposure to mortgages.
Most of the strength in the housing market is coming from multi-family units (up +28.9%) instead of more traditional single family residences (up +8.3%). Historically, we are still at relatively low levels vs. the trough of 2009 for Housing Starts and nowhere near the levels experienced during the last real estate bubble. I am not sure if we will reach these historically high levels during this business cycle, but there does seem to be room for more growth, which is dependent upon New Household Formations and expanding Employment Opportunities.