Housing Starts: Bottoming, Not Sharp Rebound

Bottom Line:   Housing Starts fell more than expected in June, and there were negative revisions to prior data. The new home market continues to perform better than existing home sales as demand remains robust, despite worse affordability. But this report is a reminder that a "V-shaped" bottom in housing is unlikely. Builders remain cautious, particularly when mortgage rates move higher, as they did in May and again in late June. Looking forward, building permits were lower than expected, confirming the notion that we are seeing a slow bottoming process rather than a sharp snapback.