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US Housing Starts Decline For 2 Consecutive Months

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Apr. 29 2015, Updated 7:06 a.m. ET

US housing starts

Previously, we discussed the steel consumption outlook released by the WSA (World Steel Association). It expects US steel consumption to drop by 0.4% this year. The construction sector is the biggest consumer of steel products in the US. The construction sector supports demand for metals like steel, copper, and aluminum. Steel companies like , Steel Dynamics (STLD), ArcelorMittal (MT), and POSCO (PKX) supply products to the construction industry.

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Residential real estate spending makes up more than one-third of total construction spending. There are several indicators that investors can track to get a sense of the residential real estate industry. In this part, we’ll analyze the housing starts index. The housing starts index represents the construction of the foundation of a residential home. It’s a leading indicator of the residential real estate industry.

Housing starts decline

March housing starts declined 3.5% on a YoY (year-over-year) basis. In February, housing starts dropped by 2.3%. The data was released on April 16. It was lower than expected. A slowdown in the housing industry is negative for steel demand. The SPDR S&P Metals and Mining ETF (XME) invested in several US-based metal companies. Schnitzler Steel (SCHN) forms 1.15% of XME.

Building permits

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