CHART OF THE WEEK
Data published last week showed sales of previously owned single-family homes and new builds rebounding almost 3%, having previously fallen 8%. Monthly volatility aside, new home sales remain on the same upward trend as during the past five years. Building permits have declined somewhat in recent months although this follows a sharp rise at the end of 2016.
OUR ANALYSIS
Construction is traditionally volatile industry affected by various factors, not least the weather. The first quarter of 2017 was good and although the second quarter may post a slight slowdown, volumes remain on the upward trend seen in recent years. The fundamentals look positive. Home prices have moved roughly in line with incomes in recent years and rental returns remain attractive. Furthermore, construction volumes fall short of the requirements implied by population growth trends, household incomes and therefore purchasing power remain underpinned by a solid labour market.
The opinion expressed above is dated June 28th, 2017 and is liable to change
This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.
