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Tuesday, October 20, 2015

September 2015 Residential Permits, Starts and Completions

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Total housing starts rose in September to a seasonally adjusted and annualized rate (SAAR) of 1.206 million units (1.14 million expected) -- comparable to activity previously seen (other than this past June) in October 2007. September’s level was 74,000 units above (+6.5% ± 16.4%*) August’s 1.132 million units (revised from 1.126 million). The increase in total starts was split as follows -- single-family: +3,000 units (+0.3% ± 9.6%*); multi-family: +72,000 units (+18.3%). September marks the fifth consecutive month in which there were more than 500,000 multi-family units under construction in structures with five or more units, the longest streak since the mid-1970s.
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category. 
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Total starts were 17.8% above their not-seasonally adjusted year-earlier level (single-family: +11.1%; multi-family: +28.7%). Year-to-date (YTD) comparisons to 2014 were all in the 11 to 14% range. 
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Completions rose by 72,000 units (+7.5% ± 13.6%*) in September, to 1.028 million units SAAR. The increase was limited to the multi-family component (+84,000 units or 27.9%); single-family completions fell by 12,000 units (-1.8% ± 9.9%*). 
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Total permits retreated again in September, falling by 58,000 units (-5.0% ± 1.4%) to 1.103 million SAAR. The decrease fell more heavily on the multi-family component: -56,000 units (-12.1%); single-family: -2,000 units (-0.3% ± 1.9%*). YTD total permits were 11.2% above the same months in 2014, driven by the multi-family component (+18.3%).
The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) gained 3 points (to 63) in October -- a level comparable to the end of the housing boom in late 2004. (An HMI value above 50 means more builders feel the market is good than feel it is poor.) “The fact that builder confidence has held in the 60s since June is proof that the single-family housing market is making lasting gains as more serious buyers come forward,” said NAHB Chairman Tom Woods. “However, our members continue to tell us there are still pockets of softness in some markets across the nation, and that they face challenges regarding the availability of lots and labor.”
“With October’s three-point uptick, builder confidence has been holding steady or increasing for five straight months. This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” said NAHB Chief Economist David Crowe. “With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 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.

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