Housing starts are amazingly strong but building permits are down – how does it affect real estate, economy, stocks, gold, dollar and bonds?
Joesph Weinman
Oct. 18, 2006

Housing starts are amazingly strong but building permits are down. Some analysts and economists are perplexed. When you analyze the data more closely region by region you see a very interesting pattern.

Hosing starts are strongly up in every part of the country. Building permits are down in the areas where the real estate froth was seen last few years. This really shows that the builders are finally scared now looking at their next year sales plans. The higher demands is boosting the housing starts while scare in builders mind about their future is scaring them.

That is as bullish as it can be. Every bull market starts with a solid correction and bearish sentiment among the major players while the fundamentals are strong.

This is no different. The real estate market in US like that of UK is going to tuen around and the rally actually has started already.

The effects on bonds obviously is bad. But Asian central banks control the long end of the curve while Fed control the short end. The ten year note can retest the 5.2% yield but that is where the cap is. The short term rates can go up if real estate rebounds. It is possible the Fed will raise rates three times next year to take Fed funds to 6.00. The steep inverted yield curve gives boost to dollar, a problem for gold, a danger signal for stocks and some sluggishness in the economy.

Housing starts are amazingly strong but building permits are down – how does it affect real estate, economy, stocks, gold, dollar and bonds?
Joesph Weinman
Housing starts are amazingly strong but building permits are down. Some analysts and economists are perplexed. When you analyze the data more closely region by region you see a very interesting pattern.
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