January 2015 Residential Permits, Starts and Completions

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Total housing starts retreated in January, to a seasonally adjusted and annualized rate (SAAR) of 1.065 million units. That level was 22,000 units lower (-2.0%) than December’s 1.087 million units (revised down from 1.089 million). All of the decrease in total starts occurred in the single-family component (-49,000 units or 6.7%); multi-family starts rose by 27,000 units (+7.5%). 

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The year-over-year percentage change in total starts remained positive in January (+18.3%). Single-family starts were 14.8% above their year-earlier level, and +24.4% for the multi-family component. One can see the magnitude of the seasonal adjustments by comparing the current-month SAAR estimates in the table above with the not-seasonally adjusted year-to-date values. 

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Completions rose by 12,000 units (+1.3%) in January, to 930,000 units SAAR. All of the increase occurred in the multi-family component (+27,000 units or 10.6%); the single-family component shrank by 15,000 units (-2.3%). Total completions were 9.6% above their year-earlier level. 

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Total permits declined in January, decreasing by 7,000 units (-0.7%), to 1.053 million SAAR. All of the decrease occurred in the single-family component (-21,000 units or 3.1%); multi-family permits rose (+14,000 units or 3.6%). January total permits were 3.6% above their year-earlier level.

The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) shed two points in February (to 55). An index value above 50 means more builders feel the market is good than feel it is poor. “Overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation,” said NAHB Chairman Tom Woods. Interestingly, builder confidence rose in the Northeast (where snowfall has been heaviest) but fell in the Midwest.

“For the past eight months, confidence levels have held in the mid- to upper 50s range, which is consistent with a modest, ongoing recovery,” said NAHB Chief Economist David Crowe. “Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead.” 

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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.