October 2016 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in October at a seasonally adjusted annual rate (SAAR) of 1.323 million units (1.168 million expected). That was 25.5 percent (±12.6%) above the revised September estimate of 1,054,000 (originally 1.047 million). The multi-family segment led the increase: +185,000 units (68.8%), to 454,000 units. Single-family starts rose by a less exuberant 84,000, or 10.7 percent (±10.2%), to 869,000 units. 

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October’s total SAAR was 23.3 percent (±14.4%) above the October 2015 SAAR of 1.073 million units; the not-seasonally adjusted YoY change (shown in the table above) was +26.4%. Single-family starts were 24.8% higher YoY, and the multi-family component was 29.4%. 

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Total completions in October rose by 55,000 units, or 5.5 percent (±10.1%)*, to a SAAR of 1.055 million units. That was 7.2 percent (±12.3%)* above the October 2015 SAAR of 984,000; the NSA comparison: +8.5% YoY.

Single-family housing completions advanced by 28,000 units, or 3.9 percent (±11.3%)* -- and +16.8% YoY. Multi-family completions rose by 27,000 units (+9.7% MoM, but -8.5% YoY).

* 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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Total permits edged up by 4,000 units, or 0.3 percent (±2.0%)*, to a SAAR of 1.229 million (1.190 million expected). That was 4.6 percent (±1.4%) above the October 2015 SAAR of 1.175 million; the non-seasonally adjusted YoY comparison was -1.4%.

Single-family authorizations jumped by 20,000 units, or 2.7 percent (±1.4%), to 762,000 units; multi-family permits fell by 16,000 units (-3.3%), to 467,000. Single-family permits were 0.3% higher YoY; multi-family: -4.1% YoY. 

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Builder confidence in the market for newly built, single-family homes in November held level at 63 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“With most of our members responding before the November elections, confidence levels remained unchanged as they awaited the results,” said NAHB Chairman Ed Brady. “Still, builder sentiment has held well above 60 for the past three months, indicating that the single-family housing sector continues to show slow, gradual growth.”

“Ongoing job creation, rising incomes and attractive mortgage rates are supporting demand in the single-family housing sector,” added NAHB Chief Economist Robert Dietz. “This will help keep housing on a steady, upward glide path 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.