The US dollar softened throughout the New York session as mixed reports from the housing sector reaffirmed much of the dour sentiment on everything from construction to subprime loans. Housing starts fell in line with expectations by 2.1 percent to 1474K from an upwardly revised 1506K, signaling that homebuilders are not initiating projects as quickly as in previous months.
However, building permits jumped a greater-than-expected 3.0 percent to 1501K from an upwardly revised 1457K. As a leading indicator for starts, the data points to a pick up in construction during the summer. Given the lack of solid demand for properties, these building plans will only contribute further to softness sector-wide as inventories will only rise further, and prices will have to be slashed in order to liquidate. The breakdown of the data is worth nothing as well: Improvements were contained to multi-family units - which tend to be rented out - while declines were seen across the board for single-family units - which are typically mortgaged. Although the multi-family index tends to be highly volatile, this will be a factor worth watching as potential homeowners seem to be shifting towards more affordable rentals and away from expensive loans as mortgage rates rise.