December 2017 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in December were at a seasonally adjusted annual rate (SAAR) of 1,192,000 units (1.280 million expected). This is 8.2% (±7.7%) below the revised November estimate of 1,299,000 (originally 1.297 million units) and 6.0% (±11.7%)* below the December 2016 SAAR of 1,268,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -7.2%. An estimated 1,202,100 housing units were started in 2017, 2.4% (±2.3%) above the 2016 figure of 1,173,800.

Single-family housing starts in December were at a SAAR of 836,000; this is 11.8% (±6.5%) below the revised November figure of 948,000 and +2.6% YoY. Multi-family starts: 356,000 units (+1.4% MoM; -22.6% 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 completions amounted to a SAAR of 1,177,000 units. This is 2.2% (±17.8%)* above the revised November estimate of 1,152,000 and is 7.4% (±13.0%)* above the December 2016 rate of 1,096,000; the NSA comparison: +7.8% YoY. An estimated 1,152,300 housing units were completed in 2017, 8.7% (±3.1%) above the 2016 figure of 1,059,700.

Single-family completions were at a SAAR of 818,000; this is 4.3% (±20.5%)* above the revised November rate of 784,000 and +7.5% YoY. Multi-family completions: 359,000 units (-2.4% MoM; +8.7% YoY). 

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Total permits were at a SAAR of 1,302,000 units (1.300 million expected). This is 0.1% (±1.4%)* below the revised November rate of 1,303,000, but is 2.8% (±1.9%) above the December 2016 SAAR of 1,266,000; the NSA comparison: -1.7% YoY. An estimated 1,263,400 housing units were authorized by building permits in 2017, 4.6% (±0.6%) above the 2016 figure of 1,206,600. The not-seasonally adjusted data put total permits for 2017 at 1.254 million units (+4.0% YTD/YTD).

Single-family authorizations were at a SAAR of 881,000; this is 1.8% (±1.2%) above the revised November figure of 865,000 and +1.8% YoY. Multi-family: 421,000 (-3.9% MoM; -6.6% YoY). 

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Builder confidence in the market for newly-built single-family homes dropped two points to a level of 72 in January on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) after reaching an 18-year high in December 2017.

“Builders are confident that changes to the tax code will promote the small business sector and boost broader economic growth,” said NAHB Chairman Randy Noel. “Our members are excited about the year ahead, even as they continue to face building material price increases and shortages of labor and lots.”

“The HMI gauge of future sales expectations has remained in the 70s, a sign that housing demand should continue to grow in 2018,” said NAHB Chief Economist Robert Dietz. “As the overall economy strengthens, owner-occupied household formation increases and the supply of existing home inventory tightens, we can expect the single-family housing market to make further gains this 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.