June 2015 Residential Permits, Starts and Completions

Click image for larger view 

Click image for larger view

Total housing starts jumped higher in June, to a seasonally adjusted and annualized rate (SAAR) of 1.174 million units (1.125 million expected) -- the fastest rate since November 2007 (ignoring April 2015, which was revised to 1.190 million). June's level was 105,000 units higher (+9.8%) than May’s 1.069 million units. The increase in total starts was split as follows -- single-family: -6,000 units (-0.9%); multi-family: +111,000 units (29.4%). Incidentally, the number of multi-family starts is the greatest since April 1988. 

Click image for larger view

Total starts were 26.5% above their year-earlier level (single-family: +14.0%; multi-family: +55.3%). Not-seasonally adjusted year-to-date (YTD) comparisons to 2014 rose across all components relative to May’s results. It is too early to tell whether the YoY percentage change in total starts has broken off the downward trend present since 2013. 

Click image for larger view 

Click image for larger view

Completions fell by 70,000 units (-6.7%) in June, to 972,000 units SAAR. The decrease was greatest in the multi-family component (-68,000 units or 17.3%); single-family edged down by 2,000 units (-0.3%). Despite the monthly declines, YoY and YTD completions relative to 2014 were higher on a percentage basis in June than in May. 

Click image for larger view 

Click image for larger view

Total permits gained for a third month in June (+93,000 units or 7.4%), to 1.343 million SAAR (1.178 million expected). The multi-family component dominated again in June: +87,000 units (15.3%); single-family: +6,000 units (0.9%). At a SAAR of 656,000 units, multi-family permits were nearly double those of a year earlier and 13.9% higher than the previous record set back in June 2008. YTD total permits were 14.3% above the same months in 2014, driven by the multi-family component (+27.2%).

The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) ticked up to 60 (+1 point) in July -- the highest level since November 2005. An index value above 50 means more builders feel the market is good than feel it is poor. “The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace,” said NAHB Chairman Tom Woods. “As we head into the second half of 2015, we should expect a continued recovery of the housing market.”

“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth,” said NAHB Chief Economist David Crowe. “However, builders still face a number of challenges, including shortages of lots and labor.” 

Click image for larger view

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.