Housing Steady

Housing starts dipped 0.3% in May to an annual rate of 1.164 million units, the Commerce Department said Friday. Wall Street had expected starts to come in at a 1.15 million annualized rate. Building permits, a gauge of future of construction activity, rose 0.7% to 1.138 million rate. Economists had expected 1.14 million.

Single-family starts edged up 0.3% vs. April and 10.1% vs. a year earlier. But single-family permits dipped 2%, though are still up 4.8% year-over-year.

Starts up 9.5% vs. a year earlier, but permits are down 10.1%.

Homebuilders have been reluctant to step up construction, despite tight supply that it is pushing home prices. Land and labor costs, red tape, and a general reluctance to overextend themselves after the housing boom-bust have all contributed. With mortgage rates once again headed lower and millennials a huge pool of potential buyers, demand should remain strong.

D.R. Horton (DHI) and LGI Homes (LGIH) stocks are setting up in consolidations. D.R. Horton rose 2% in premarket trading on the stock market today, with Argus Research initiating the builder at a buy with a 39 price target. LGI Homes was little changed…