GoldPrice.

While the ongoing partial government shutdown (now the longest in history) has delayed the release of the most current housing starts data, the private sector has stepped in with its own estimates.

Key Takeaways

• BuildFax estimates that there was a 1% decrease in permits for single-family homes in December compared to November.
• This estimate assumes a rate of 840,000 permits for the month, the lowest since August.
• The National Association of Realtors (NAR) estimates the yearly total for single-family starts in 2018 to be 876,000, a 3% increase over the year before.

BuildFax, a company which tracks data regarding properties and their conditions, supplied an estimate which states that 1% fewer permits for new single-family homes came in in December over November, and that the figure is 3.8% lower year-on-year.

The Commerce Department’s New Residential Sales report has been delayed due to the government shutdown and was due this morning – the BuildFax estimate may not fall in line with the true data to be released in the upcoming government report.

NAR reports that 3% more ground-breakings occurred in 2018 over 2017, perhaps pointing to a gradual relief in the softening trends seen in the housing market.

Due to the government shutdown, more than 800,000 federal workers have been furloughed and housing starts have been knocked off the calendar. What affect do you think this will have on sales of existing homes? #shutdown pic.twitter.com/jnjZfymPNQ

— Mark Peter Lynch (@MarkPeterLynch) January 16, 2019

Expert Outlook

Permits are considered one of the best leading indicators of the housing market, although it’s important to bear in mind that not all permits lead to a housing start, and that in measuring starts, analysts are measuring the economic activity generated through the purchase of supplies and labor and the overall economic impact of building a home.

MarketWatch quote Rob Dietz, chief economist at NAHB, as stating that “it’s not always the case that a permit becomes a start. The start indicates that construction is taking place, materials are being purchased, workers are being contracted.”

BuildFax told MarketWatch “historically, when compared to other factors, U.S. housing authorization activity has one of the highest correlations with each economic downturn between 1961 and 2018.”

Market Reaction

Spot gold last traded at $1,291.56/oz, hovering in the mid-range which has seen a high of $1,295.26/oz and a low of $1,289.92/oz. Housing starts often point to underlying trends in the US economy, and with the decline seen in the housing industry recently the data is all the more important.

Given the delay in the official release of the usual housing starts data from the Commerce Department, it’s unlikely that the private sector estimates have had much of an effect on the gold market today.

However, the cause of the delayed report, the ongoing partial shutdown of the US government, surely has, leading to market concerns and tensions in the US and internationally as the government struggles to come find amicable terms for all government bodies regarding the Trump administration’s demand for funding to build a wall on the southern border.