Tuesday, June 20, 2006

Starts Up, Permits Down

Stocks smile on mixed housing news

Starts rise, but building permits fall more than expected; futures move higher as news offers no major shock to inflation-weary markets.

NEW YORK (CNNMoney.com) - Stocks looked set for a slightly higher open Tuesday after the latest housing numbers came in mixed and failed to scare a market already rattled with the inflation jitters.

Stock futures are higher, indicating a higher opening for stocks.

The latest read on the housing market showed housing starts coming in stronger than expected, but a building permits number slightly below estimates.
The Commerce Department said May housing starts registered 1.96 million units at an annualized pace. That's a 5 percent increase from the revised 1.86 million annual rate for April and higher than the 1.87 million rate predicted by economists, according to Briefing.com.
But building permits fell 2 percent to an annualized 1.93 million unit pace, a bigger drop than expected. Economists were looking for a fall to 1.95 million units from April's revised 1.97 million figure.

A number far above estimates could have stoked inflation fears, which have been weighing on stocks since mid May.

"It doesn't have to be below, but it can't be significantly above," said Art Hogan, chief market analyst at Jefferies & Co, prior to the report's release. "It's not at the forefront of the Fed's radar screen, but it's certainly something we'll be watching."

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