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Friday, October 21, 2016

September 2016 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in September at a seasonally adjusted annual rate (SAAR) of 1.047 million units (1.180 million expected). That was 9.0 percent (±9.2%)* below the revised August estimate of 1.150 (originally 1.142 million). The multi-family component led the decrease: -162,000 units (-38.0%), to 264,000 units. Single-family starts, by contrast, jumped by 59,000 units, or +8.1 percent (±7.4%), to 783,000 units.
* 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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September’s total SAAR was 11.9 percent (±11.9%) below the September 2015 SAAR of 1.189 million units; the not-seasonally adjusted YoY change (shown in the table above) was -15.1%. Single-family starts were 4.6% higher YoY, and the multi-family component was -42.5%. 
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Total completions fell by 87,000 units, or -8.4 percent (±10.3%)*, to a SAAR of 951,000 units. That was 5.8 percent (±13.4%)* below the September 2015 SAAR of 1.010 million; the NSA comparison: -6.5% YoY.
Single-family completions retreated by 66,000 units, or -8.8 percent (±9.8%)*, to 687,000 units -- but still +5.9% YoY. Multi-family completions dropped by 21,000 units (-7.4% MoM, and -27.2% YoY). 
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Total permits rose by 73,000 units, or 6.3 percent (±1.9%), to 1.225 million (1.165 million expected). That was 8.5 percent (±2.4%) above the September 2015 SAAR of 1.129 million; the non-seasonally adjusted YoY comparison was +8.9%.
Single-family authorizations edged up by 3,000 units, or +0.4 percent (±1.6%)*, to 739,000; multi-family permits jumped by 70,000 units (+16.8%) to 486,000. Single-family permits were 18.2% higher YoY; multi-family: -6.1% YoY. 
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Builder confidence in the market for newly built, single-family homes in September dropped two points (to 63) on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
“Even with this month’s drop, builder confidence stands at its second-highest level in 2016, a sign that the housing recovery continues to make solid progress,” said NAHB Chairman Ed Brady. “However, builders in many markets continue to express concerns about shortages of lots and labor.”
“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family 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.

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