December 2016 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in December at a seasonally adjusted annual rate (SAAR) of 1.226 million units (1.200 million expected). That is 11.3 percent (±10.4%) above the revised November rate of 1.102 million (originally 1.090 million).

The multi-family segment led the increase: 157,000 units (+57.3%), to 431,000 units. Single-family starts declined by 33,000 units, or -4.0 percent (±9.2%)*, to 795,000 units.

An estimated 1.166 million housing units were started in 2016. This is 4.9 percent (±2.5%) above the 2015 figure of 1,111,800.

* 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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December’s total SAAR was 5.7 percent (±12.0%)* above the December 2015 SAAR of 1.160 million; the not-seasonally adjusted YoY change (shown in the table above) was +6.4%. Single-family starts were 3.8% higher YoY, and the multi-family component was 11.1% higher. 

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Total housing completions in December retreated by 96,000 units, or -7.9 percent (±11.4%)*, to a SAAR of 1.123 million. That was 8.7 percent (±10.1%)* above the December 2015 SAAR of 1.033 million; the NSA comparison: +10.4% YoY.

Single-family housing completions fell by 7,000 units, or -0.9 percent (±9.3%)*, to 761,000; that is +8.0% YoY. Multi-family completions tumbled by 89,000 units (-19.7% MoM, and +16.5% YoY).

An estimated 1.062 million housing units were completed in 2016. This is 9.7 percent (±3.4%) above the 2015 figure of 968,200. 

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Total permits edged down by 2,000 units, or -0.2 percent (±1.8%)*, to a SAAR of 1.210 million units (1.230 million expected). That was 0.7 percent (±1.6%)* above the December 2015 SAAR of 1.201 million; the non-seasonally adjusted YoY comparison was -7.7%.

Single-family rose by 37,000 units, or +4.7 percent (±1.7%), to 817,000 units; multi-family permits fell by 39,000 (-9.0%), to 393,000. Single-family permits were 6.4% higher YoY; multi-family: -23.4%.

The Census Bureau reports an estimated 1.187 million building permits were issued in 2016 -- a 0.4 percent (±0.8%)* increase from 2015. Interestingly, the raw data yields an estimate of 1.172 million permits in 2016, a 0.9% decrease. 

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Builder confidence in the market for newly built, single-family homes in January declined two points, to a level of 67, from a downwardly revised December reading of 69 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process,” said NAHB Chairman Granger MacDonald.

“NAHB expects solid 10% growth in single-family construction in 2017, adding to the gains of 2016,” said NAHB Chief Economist Robert Dietz. “Concerns going into the year include rising mortgage interest rates as well as a lack of lots and access to labor.”

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.