February 2015 Residential Permits, Starts and Completions

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Total housing starts slumped in February, to a seasonally adjusted and annualized rate (SAAR) of 897,000 units (1.048 million expected). That level was 184,000 units lower (-17.0%) than January’s 1.081 million units (revised up from 1.065 million). The majority of the decrease in total starts occurred in the single-family component (-104,000 units or -14.9%); multi-family starts fell by 80,000 units (-20.8%). 

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The year-over-year percentage change in total starts slipped into negative territory in February (-4.1%). Single-family starts were 0.2% above their year-earlier level, but -11.4% for the multi-family component. Not-seasonally adjusted year-to-date (YTD) comparisons to 2014 are more upbeat. 

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Completions also stumbled, falling by 136,000 units (-13.8%) in February, to 850,000 units SAAR. Once again, most of the decrease occurred in the single-family component (-82,000 units or -12.1%); the multi-family component shrank by 54,000 units (-17.5%). As was the case with starts, however, completions’ YTD comparison with 2014 remains safely in positive territory. 

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Total permits were the bright spot in February; they increased by 32,000 units (+3.0%), to 1.092 million SAAR. All of the increase occurred in the multi-family component (+73,000 units or 18.3%); single-family permits fell (-41,000 units or -6.2%). YTD total permits were 6.5% above their year-earlier level.

The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) shed two points in March (to 53). An index value above 50 means more builders feel the market is good than feel it is poor. “Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season,” said NAHB Chairman Tom Woods.

“The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages as well as tight underwriting standards,” said NAHB Chief Economist David Crowe. “These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand.” 

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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.