Homebuilding stocks opened lower Friday, June 16, on sour new construction news.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development announced this morning that privately owned housing starts in May were 5.5% below the revised April estimate and 2.4% below the May 2016 rate. Meanwhile, building permits were 4.9% below the revised April rate and 0.8% below the May 2016 rate.
Beazer Homes USA, Inc (BZH - Get Report) , Standard Pacific Corp. (SPF) and Hovnanian Enterprises Inc. (HOV - Get Report) fell the furthest this morning, with Beazer down more than 3%, Standard Pacific edging near 2.5%, and Hovnanian down almost 2%.
D.R Horton, Inc., Pulte Group (PHM - Get Report) , KB Home (KBH - Get Report) , and Meritage Homes Corp (MTH - Get Report) were all down more than 1% from their June 15 close, with Lennar Corp. (LEN - Get Report) , Toll Brothers, Inc. (TOL - Get Report) , and SPDR S&P Homebuilders (XHB - Get Report) down almost 1%.
Importantly, the government estimates are subject to revision. The housing starts numbers have a margin of error of almost 12%, meaning an increase in housing starts is within the 90% confidence interval despite the reported decrease. Building permit numbers have a margin of error of about 1%.