January 2016 Residential Permits, Starts and Completions

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Builders started 1.099 million residential units (SAAR) in January (1.175 million expected). That is 3.8% (±12.0%)* below the revised December estimate of 1.143 million (originally 1.149 million). The MoM decrease was concentrated in the single-family component. Single-family starts were at a rate of 731,000, or 3.9% (±10.5%)* below the revised December figure of 761,000. Multi-family starts were estimated to be 368,000 units (-14,000 or 3.7%).

* 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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January’s SAAR was 1.8% (±13.5%)* above the year-earlier SAAR of 1.080 million units; the not-seasonally adjusted YoY change (shown in the table above) was +0.8%. Single-family starts were 3.2% higher YoY, while the multi-family component fell 3.4%. 

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Completions rose by 21,000 units in January, to a SAAR of 1.057 million. That is 2.0% (±9.3%)* above the revised December estimate of 1.036 million, and 8.4% (±13.2%)* above the year-earlier SAAR of 975,000. The NSA estimate was +10.3% YoY.

All of the MoM increase occurred in the multi-family component. Single-family housing completions fell by 10,000 units, to a SAAR of 693,000; that is 1.4% (±10.2%)* below the revised December rate of 703,000, but +3.3% YoY (NSA). Multi-family completions rose by 31,000 (9.3%), to 364,000 units (+26.3% YoY NSA). 

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Total permits in January were at a SAAR of 1.202 million units (1.224 million expected). That is 0.2% (±0.5%)* below the revised December rate of 1.204 million (originally 1.232 million), but 13.5% (±1.5%) above the year-earlier SAAR of 1.059 million. The NSA comparison shown above is +6.7% YoY.

All of the MoM decline in permits was concentrated in the single-family component: -12,000, to 720,000 units; that is 1.6% (±1.0%) below the revised December figure of 732,000 (+3.9% YoY NSA). Multi-family authorizations rose by 10,000 (+2.1%), to 482,000 units (+11.3% YoY NSA).

Builder confidence in the market for newly-built single-family homes fell three points to 58 in February from an upwardly revised January reading of 61 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). An index above 50 means builders who think the market is good outnumber those who think it as bad.

“Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market,” said NAHB Chairman Ed Brady. “Of note, they expressed optimism that sales will pick up in the coming months.”

“Builders are reflecting consumers’ concerns about recent negative economic trends,” said NAHB Chief Economist David Crowe. “However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing 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.