July 2015 Residential Permits, Starts and Completions

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Total housing starts were essentially flat in July, edging up to a seasonally adjusted and annualized rate (SAAR) of 1.206 million units (1.180 million expected) -- comparable to activity in November 2007. July’s level was 2,000 units above (+0.2%) June’s 1.204 million units (revised from 1.174 million). The increase in total starts was split as follows -- single-family: +89,000 units (+12.8%); multi-family: -87,000 units (-17.0%). 

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Total starts were 11.2% above their year-earlier level (single-family: +20.9%; multi-family: -3.8%). Not-seasonally adjusted year-to-date (YTD) comparisons to 2014 rose relative to June’s results except for the multi-family category. 

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Completions rose by 23,000 units (+2.4%) in July, to 987,000 units SAAR. The increase was limited to the multi-family component (+32,000 units or 9.8%); single-family completions subsided by 9,000 units (-1.4%). 

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Total permits slumped in July (-218,000 units or -16.3%), to 1.119 million SAAR (1.230 million expected). The drop was concentrated in the multi-family component: -205,000 units or -31.8% (-43.5% in non-seasonally adjusted terms); single-family: -13,000 units or -1.9%. The primary driver behind the fall-off appears to have been the expiration of a tax incentive for apartment construction in New York City; builders had rushed to file permits before the program ended in mid-June. At a SAAR of 440,000 units, multi-family permits were merely 0.3% higher than a year earlier. YTD total permits were 12.5% above the same months in 2014, driven by the multi-family component (+22.5%).

The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) ticked up to 60 (+1 point) in August -- 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 the builder confidence has been in the low 60s for three straight months shows that single-family housing is making slow but steady progress,” said NAHB Chairman Tom Woods. “However, we continue to hear that builders face difficulties accessing land and labor.” 

“Today’s report is consistent with our forecast for a gradual strengthening of the single-family housing sector in 2015,” said NAHB Chief Economist David Crowe. “Job and economic gains should keep the market moving forward at a modest pace throughout the rest of the year.” 

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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.