UPDATE: The latest housing starts and building permits data are out.
Housing starts fell to 8.5 percent to 890,000 – missing expectations of a slighter drop to 920,000 – from last month's 973,000.
Building permits rose 1.8 percent to 925,000, though – exceeding expectations of a smaller rise to 920,000 – from 909,000 last month.
We will have the full release here momentarily.
ORIGINAL: Housing starts for January are due out at 8:30 a.m. ET.
Consensus is for housing starts to decline to a pace of 914,000 units, from 954K in December.
Permits however are expected to rise to 920,000 units, up from 903K the previous month.
Homebuilder sentiment, considered a leading indicator for housing starts, declined to 46 in February. This would lead us to think that housing starts should slow.
With concerns of overbuilding posing a risk to the housing recovery, a decline in housing starts could be a good thing.
Bank of America's Michelle Meyer has pointed out three reasons not to worry about optimistic homebuilders that will overbuild. Namely that there are capacity constraints, that small homebuilders have a harder time getting financing for new projects, and that it will take large homebuilders time to kick off new projects since they downsized during the crisis.
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