Housing & Permits Outperform on Strong Single-Family

Mark Vickery
·3 min read

Friday, April 16, 2021

New data in the housing market has come out ahead of regular trading in this final session of the week, and both headline numbers surpassed expectations. On the Housing Starts side, 1.74 million new home construction projects were generated for the month of March, well beyond the 1.62 million consensus estimate. For Building Permits — a proxy for future Housing Starts — came in at 1.766 million, beating the 1.75 million expected.

New starts grew 19.4% month over month, an improvement over the 14% expected. Certainly the warmer climates of early spring have something to do with this, but one very positive development was the 15% growth in single-family homes themselves. These are the real money-makers for the housing industry, and had been putting up sluggish numbers as a scarcity of new builds and record-high lumber prices dampened the hot housing market.

Year-over-year comps — as we’ve already seen in early Q1 earnings reports — are so wide they are basically useless: single-family housing growth from March 2020 is +41%, but that tells us a lot more about the full shutdown amid “shelter in place” initiatives last year than just how hot the market is currently. This will be the case throughout the rest of the spring months, as well.

On the permits side, we see 4.6% month-over-month growth in single family housing units. This is not bad historically, but it is less than half the month-over-month single family starts growth, indicating a slowdown from current building rates may be forthcoming. In all, the industry expects another 3.8 million single-family homes are still in demand currently. The housing market has come a long way, but there is still ground to catch up.

Morgan Stanley MS becomes the latest Wall Street bank to clobber earnings expectations in Q1, posting $2.19 per share versus $1.72 in the Zacks consensus, and 2.2x the year-ago bottom line of 99 cents per share. Revenues grew 61% from a year ago to $15.7 billion, well outpacing the $13.8 billion our analysts had been looking for. One note in the earnings release did surprise investors this morning: a $911 million loss from a single prime brokerage client — presumed by all to be fallout from Archegos.

Market futures are climbing in the pre-market, with the Dow looking to open 80 points, the Nasdaq +30 and the S&P 500 +10. This follows record-high closes on both the Dow and S&P yesterday afternoon, whereby the former surpassed 34K for the first time ever. The Nasdaq has now pulled within a percentage point of its all-time high set last fall. The S&P 500 is on its hottest pace currently since back in August of last year.

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