US housing starts and permits for June beat forecasts

Housing activity Stateside picked up in June, even as a lead indicator for the sector pointed to further short-term gains

US housing starts jumped by 4.8% month-on-month to reach an annualised pace of 1.189m, but were nevertheless 2.0% below year ago levels, according to the Department of Commerce.

Analysts had penciled in a rise to 1.170m from the revised estimate of 1.135m for May.

Single-family home starts increased 4.4% over the month to reach 745,000.

Building permits, widely considered to be a lead indicator for activity in the sector, rose by 1.5% over the month to reach 1.153m, despite a 10.1% drop in the number issued in the West of the country.

June's tally for total permits were slightly ahead of the consensus forecast for a reading of 1.15m.

Permits were 13.6% above their year earlier mark.

"The jump in starts is hard to explain in the context of the previous decline in permits, and for once we can't blame the erratic multi-family component [...]

"Permits, meanwhile, are less volatile than starts and are recovering slowly after the sharp drop triggered by the rollover in the stock market at the start of the year. We expect all the key housing indicators to improve through H2, but not by enough alone to make a a significant difference to the overall pace of growth. That said, a stronger housing market is a powerful boost to confidence and peoples' balance sheets," Pantheon Macroeconomics's chief economist Ian Shepherdson said in a research report sent to clients.