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Wednesday, November 19, 2014

October 2014 Residential Permits, Starts and Completions

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Total housing starts retreated in October, to a seasonally adjusted and annualized rate (SAAR) of 1.009 million units. That level was 29,000 fewer (-2.8%) than September’s 1.038 million units. All of the decrease in total starts occurred in the multi-family component (-57,000 units or 15.4%); single-family starts rose by 28,000 units (4.2%). 
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The year-over-year percentage change in total starts slowed in October (+7.7%). Single-family starts were 16.3% above their year-earlier level; the more volatile multi-family component fell to 6.8% below its September 2013 level. On a year-to-date basis, all components are above levels seen during the same months in 2013. 
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Completions decreased by 85,000 units (8.8%) in October, to 881,000 units SAAR. Over half of the decrease occurred in the single-family component (-47,000 units or 7.4%); the multi-family component shrank by 38,000 units (-11.4%). Total completions were 8.7% above their year-earlier level. On a year-to-date basis, total completions are 16.3% higher than the same months in 2013. 
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Total permits were the bright spot in October, increasing by 49,000 units (4.8%), to 1.080 million SAAR. Over eight-tenths of the increase occurred in the multi-family component (40,000 units or 10.0%); single-family permits edged higher (9,000 units or 1.4%). October total permits were 2.7% above year-earlier levels; on a year-to-date basis, total permits were 3.5% higher than the same months in 2013.
It appears the slide in the rate of annual growth in total permits seen since late 2012 has ended, but it is still too early to tell whether the trend is poised to turn back up. That may be the case, given the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) jumped four points in November (to 58), one point shy of September’s nine-year high of 59. An index value above 50 means more builders feel the market is good than feel it is poor.
“Growing confidence among consumers is what’s fueling this optimism among builders,” said NAHB Chairman Kevin Kelly. “Members in many areas of the country continue to see increasing buyer traffic and signed contracts.” 
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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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