Earnings reports will be a focal point for the market on Wednesday, but so, too, will the Housing Starts and Building Permits report for September, which will help feed economic growth prospects and earnings expectations for the homebuilding companies.
Housing Starts and Building Permits Report for September (Wednesday, October 18, 8:30 a.m. ET)
- Why it's important
- It's seen as a leading indicator of economic activity (builders won't build in earnest unless they are reasonably confident the homes can be sold in a relatively short period of time and at a profit)
- There's a multiplier effect with housing starts (from job creation to discretionary purchases of related housing items when homes are sold)
- Building permits lead starts and can be read as a harbinger of how robust starts may be (or not be) in the near term
- The level and trend in single-family starts offers better insight on builders' read of economic prospects than do multi-family starts, which are more volatile
- This report will factor into third quarter GDP computations by way of the data provided for the number of units under construction
- This is a report that contains what is known as "hard" data, which is quantifiable and a product of actual economic activity. Therefore, it will provide another read of how "hard" data is tracking against "soft" data, which is qualitative in nature and driven by opinions.
- This report is expected to capture the impact of Hurricanes Harvey and Irma, which hit in late-August and early-September, respectively. The difficulty in forecasting following such natural disasters could lead to some noteworthy headline surprises for starts and/or permits.
- A closer look
Wed., Oct. 18 Time of Release Briefing.com Consensus Prior Housing Starts 8:30 ET 1160K 1180K Building Permits 8:30 ET 1225K 1300K
- What's in play?
- Government bond ETFs (eg. SHY, IEF, IEI, TLT, TBT, SCHO)
- Sector ETFs
- SPDR S&P Homebuilders ETF (XHB)
- iShares U.S. Home Construction ETF (ITB)
- Individual issues
- Lennar (LEN)
- Pulte Home (PHM)
- Ryland (RYL)
- Standard Pacific (SPF)
- DR Horton (DHI)
- Toll Brothers (TOL)
- MDC Holdings (MDC)
- Hovnanian (HOV)
- NVR, Inc. (NVR)
- KB Home (KBH)
- Beazer Homes (BZH)
- CalAtlantic Group (CAA)
- TRI Pointe Group (TPH)