July 2016 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units at a seasonally adjusted and annualized rate (SAAR) of 1.211 million units in July (1.180 million expected). That was 2.1 percent (±8.8%)* above the revised June estimate of 1.186 million (originally 1.189 million units). The multi-family component led the increase: +21,000 units (+5.0%); single-family starts rose by 4,000 units, or 0.5 percent (±8.6%)* above the revised June figure of 766,000.

* 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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July’s total SAAR was 5.6 percent (±14.7%)* above the July 2015 SAAR of 1.147 million; the not-seasonally adjusted YoY change (shown in the table above) was +6.3%. Single-family starts were 1.3% higher YoY, and the multi-family component was +16.7%. 

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Total completions fell by 93,000 units, or 8.3 percent (±8.9%)*, to 1.026 million. That was 3.2 percent (±11.2%)* above the July 2015 SAAR of 994,000; the NSA comparison: +1.6% YoY.

Single-family housing completions were at a SAAR of 743,000 or 0.4 percent (±8.8%)* below the revised June rate of 746,000; multi-family completions slumped up by 24.1% MoM. Single-family completions were 17.3% above their year-earlier level; multi-family: -22.2% YoY. 

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Total permits decreased by 1,000 units or 0.1 percent (±1.2%)* below the revised June rate of 1.153 million. That estimate was 0.9 percent (±1.5%)* above the July 2015 SAAR of 1.142 million; the NSA comparison was -7.2% YoY.

The MoM decline was entirely a function of the single-family component: 3.7 percent (±1.4%) below the revised June figure of 738,000. On a YoY basis, single-family permits were 7.4% lower, and the multi-family component was -6.7%; multi-family permits were also 18.0% lower YTD through July than the same months in 2015. 

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Builder confidence in the market for newly constructed single-family homes in August rose two points to 60 from a downwardly revised reading of 58 in July on the National Association of Home Builders/Wells Fargo Housing Market Index.

“New construction and new home sales are on the rise in most areas of the country, and this is helping to boost builder sentiment,” said NAHB Chairman Ed Brady.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” said NAHB Chief Economist Robert Dietz.  “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

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.