March 2016 Residential Permits, Starts and Completions

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Builders started 1.089 million residential units (SAAR) in March (1.167 million expected), 8.8 percent (±11.1%)* below the revised February estimate of 1.117 million (originally 1.178 million). Most of the MoM decrease in total starts occurred in the single-family component: -77,000 units, to 764,000 units; that was 9.2 percent (±10.3%)* below the revised February figure of 841,000. Multi-family starts declined by 28,000 units, to 325,000 (-7.9% 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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March’s SAAR was 14.2 percent (±11.7%) above the year-earlier SAAR of 954,000; the not-seasonally adjusted YoY change (shown in the table above) was +11.3%. Single-family starts were 19.1% higher YoY, while the multi-family component was 4.1% lower. Equally noteworthy, multi-family starts were unchanged on a year-to-date (YTD) basis compared to the same months in 2015. 

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Completions rose by 36,000 units, or 3.5 percent (±13.3%)* to 1.061 million units; that SAAR is 31.6 percent (±15.2%) above the year-earlier figure. The NSA comparison: +28.6% YoY.

All of the MoM increase in completions occurred in the multi-family component (+38,000 units, or 13.1%), to 327,000 units; that was also +41.4% YoY. Single-family completions inched down by 2,000 units, or 0.3 percent (±11.5%)* to 734,000 units. That SAAR is 23.2 percent (±14.3%) higher than the year-earlier level; the NSA comparison is +24.2% YoY. 

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Total permits in March tumbled by 91,000 units, or -7.7 percent (±1.2%) to 1.086 million (1.200 million expected); but that SAAR was 4.6 percent (±0.9%) above the year-earlier figure. The NSA comparison was +7.9% YoY.

Multi-family permits were responsible for most of the MoM drop; they fell by 82,000 units (-18.6%) to 359,000. Moreover, that was 8.9% below year-earlier levels. Single-family permits also fell, although by a more modest 9,000 units, or 1.2 percent (±1.1%) to 727,000. That SAAR was +13.2 percent (±1.1%) YoY; the NSA comparison was +17.7%. Again, it is worth noting that YTD multi-family permits were 3.1% below the same months a year earlier. 

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Builder confidence in the market for newly-built single-family homes was unchanged at 58 in April on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Builder confidence has held firm at 58 for three consecutive months, showing that the single-family housing sector continues to recover at a slow but consistent pace,” said NAHB Chairman Ed Brady.  “As we enter the spring home buying season, we should see the market move forward.”

“Builders remain cautiously optimistic about construction growth in 2016,” said NAHB Chief Economist Robert Dietz. “Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.” 

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.