June 2016 Residential Permits, Starts and Completions

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Builders initiated construction of privately-owned housing units at a seasonally adjusted and annualized rate (SAAR) of 1.189 million units in June (1.170 million expected). That was 4.8 percent (±13.5%)* above the revised May estimate of 1.135 million (down from the original 1.164 million units); had the May estimate been left unrevised, the MoM percentage change would have been only +2.1%. The single-family component led the increase: +33,000 units or 4.4 percent (±15.8%)* above the revised May figure of 745,000; multi-family starts rose by 21,000 units (+5.4%).

* 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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June’s total SAAR was 2.0 percent (±12.9%)* below the June 2015 rate of 1.213 million; the not-seasonally adjusted YoY change (shown in the table above) was -0.6%. Single-family starts were 10.5% higher YoY, while multi-family component was 18.6% lower. 

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Total completions rose by 126,000 units, or 12.3 percent (±10.7%), to 1.147 million. That was 18.7 percent (±14.9%) above the June 2015 SAAR of 966,000; the NSA comparison: +16.5% YoY.

Single-family housing completions were at a SAAR of 752,000 or 3.7 percent (±10.2%)* above the revised May rate of 725,000; multi-family completions rocketed up by 33.4% MoM. Single-family completions were 18.0% above their year-earlier level; multi-family: +13.8% YoY. 

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Total permits increased by 17,000 units or 1.5 percent (±1.3%), to 1.153 million units. That SAAR was 13.6 percent (±0.6%) below the June 2015 estimate of 1.334 million; the NSA comparison was -15.4% YoY.

The MoM rise was dominated by the multi-family component (+10,000 units or 2.5%). Single-family permits increased by 7,000 units or 1.0 percent (±1.5%)* to 736,000 units. On a YoY basis, single-family permits were 4.8% higher, but multi-family units were 37.9% lower; multi-family permits were also 19.7% lower YTD through June than the same months in 2015. 

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Builder confidence in the market for newly built, single-family homes fell one point in July, to 59, from a June reading of 60 on the National Association of Home Builders/Wells Fargo Housing Market Index.

“For the past six months, builder confidence has remained in a relatively narrow positive range that is consistent with the ongoing gradual housing recovery that is underway,” said NAHB Chairman Ed Brady. “However, we are still hearing reports from our members of scattered softness in some markets, due largely to regulatory constraints and shortages of lots and labor.”

“The economic fundamentals are in place for continued slow, steady growth in the housing market,” said NAHB Chief Economist Robert Dietz. “Job creation is solid, mortgage rates are at historic lows and household formations are rising. These factors should help to bring more buyers into the market as the year progresses.”

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.