December 2014 Residential Permits, Starts and Completions

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Total housing starts advanced in December, to a seasonally adjusted and annualized rate (SAAR) of 1.089 million units. That level was 46,000 more (+4.4%) than November’s 1.043 million units (revised up from 1.028 million). All of the increase in total starts occurred in the single-family component (+49,000 units or 7.2%); multi-family starts fell by 3,000 units (-0.8%). 

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The year-over-year percentage change in total starts turned positive in December (+8.4%). Single-family starts were 12.9% above their year-earlier level; the multi-family component edged up +0.8%. On a year-to-date (YTD) basis all components were above levels seen during the same months in 2013. 

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Completions rose by 55,000 units (+6.3%) in December, to 927,000 units SAAR. All of the increase occurred in the single-family component (+58,000 units or 9.5%); the multi-family component shrank by 3,000 units (-1.1%). Total completions were 19.6% above their year-earlier level and 15.5% higher YTD than the same months in 2013. 

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Total permits declined again in November, decreasing by 20,000 units (-1.9%), to 1.032 million SAAR. All of the decrease occurred in the multi-family component (-49,000 units or 11.8%); single-family permits rose (+29,000 units or 4.5%). December total permits were 3.6% above year-earlier levels and 3.2% higher YTD than the same months in 2013.

The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) shed one point in January (to 57), two points below September’s nine-year high. An index value above 50 means more builders feel the market is good than feel it is poor. This marks the third straight month that the index has hovered in the upper-50s range.

“After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occurring in many markets throughout the nation,” said NAHB Chairman Kevin Kelly. “January’s HMI reading is in line with our forecast as we head into the new year,” added NAHB Chief Economist David Crowe. “Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015.” 

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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.