Everyone is talking about housing this morning. The tone from folks on Wall Street is downright giddy.
— Housing starts hit a much better-than-expected level of 894K, defying expectations of a monthly decline.
— Note only was the number strong, but year-over-year growth is accelerating incredibly. Check out the right column on this table, which was sent to us by trader. The year-over-year growth rate has gone from 19% to 30% to 33% to 42%.
— This is consistent with a surge in homebuilder sentiment, which rose to its highest level since 2006 yesterday.
— That surge in homebuilder sentiment foreshadows a nice rise in housing’s positive contribution to GDP.
— In fact, Deutsche Bank’s Joe LaVorgna thinks it’s possible that housing could start adding a whole percentage point of growth per quarter to GDP!
— And the gains are expected to continue for a while. Goldman Sachs sees a strong demographic force — more household formation — providing a floor for new homes built over the next few years.
— And the good news isn’t just based on new homes.
— Existing home sales blew past expectations yesterday.
— And months supply of houses available is vanishing, which is great news for people trying to sell their homes.
Bottom line: More homes are being built and bought, and the tailwind for GDP is setting up to be strong.
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