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Monday, March 21, 2016

February 2016 Residential Permits, Starts and Completions

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Builders started 1.178 million residential units (SAAR) in February (1.146 million expected), 5.2 percent (±16.9%)* above the revised January estimate of 1.120 million (originally 1.099 million) and 30.9 percent (±16.3%) above the February 2015 SAAR of 900,000.
Virtually all of the MoM increase in total starts occurred in the single-family component: +55,000 units, to 822,000 units; that was 7.2 percent (±17.4%)* above the revised January figure of 767,000. Multi-family starts inched up by 3,000 units, to 356,000 (+0.8% MoM).
* 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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February’s SAAR was 30.9% (±16.3%) above the year-earlier SAAR of 900,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +31.0%. Single-family starts were 38.4% higher YoY, while the multi-family component was up 16.9%. 
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Completions fell by 44,000 units, or -4.2 percent (±9.5%)* to 1.016 million units, but that SAAR is 17.5 percent (±14.3%) above the year-earlier figure. The NSA comparison: +19.9% YoY.
All of the MoM decrease in completions occurred in the multi-family component (-86,000 units, or -23.5%), to 280,000 units; that was +10.9% YoY, however. Single-family completions rose by 42,000 units, or 6.1 percent (±12.7%)* to 736,000 units. That SAAR is 22.3% higher than the year-earlier level; the NSA comparison is +23.7% YoY. 
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Total permits in February fell by 37,000 units, or -3.1 percent (±0.8%) to 1.167 million; but that SAAR was 6.3 percent (±2.0%) above the year-earlier figure. The NSA comparison was +8.1% YoY.
Multi-family permits were responsible for the MoM drop; they fell by 40,000 units (-8.4%) to 436,000. Moreover, that was 8.5% below year-earlier levels. Single-family, by contrast, rose by 3,000 units, or +0.4 percent (±1.2%)* to 731,000; that was +21.1% YoY.
Builder confidence in the market for newly-built single-family homes was unchanged at 58 in March on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
“Confidence levels are hovering above the 50-point mid-range, indicating that the single-family market continues to make slow but steady progress,” said NAHB Chairman Ed Brady.  “However, builders continue to report problems regarding a shortage of lots and labor.”
“While builder sentiment has been relatively flat for the last few months, the March HMI reading correlates with NAHB’s forecast of a steady firming of the single-family sector in 2016,” said NAHB Chief Economist David Crowe. “Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months.” 
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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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