May 2018 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in May at a seasonally adjusted annual rate (SAAR) of 1,350,000 units (1.320 million expected). This is 5.0% (±10.2%)* above the revised April estimate of 1,286,000 (originally 1.287 million units) and 20.3% (±14.4%) above the May 2017 SAAR of 1,122,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +17.8%.

Single-family housing starts in May were at a SAAR of 936,000; this is 3.9% (±10.6%)* above the revised April figure of 901,000 (+14.8% YoY). Multi-family starts: 414,000 units (+7.5% MoM; +25.8% 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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Completions in May were at a SAAR of 1,291,000 units. This is 1.9% (±13.7%)* above the revised April estimate of 1,267,000 and 10.4% (±12.1%)* above the May 2017 SAAR of 1,169,000 units; the NSA comparison: +11.1% YoY.

Single-family housing completions were at a SAAR of 890,000; this is 11.0% (±12.7%)* above the revised April rate of 802,000 (+12.4% YoY). Multi-family completions: 401,000 units (-13.8% MoM; +8.3% YoY). 

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Total permits in May were at a SAAR of 1,301,000 units (1.350 million expected). This is 4.6% (±1.4%) below the revised April rate of 1,364,000 (originally 1.352 million units), but 8.0% (±1.3%) above the May 2017 SAAR of 1,205,000 units; the NSA comparison: +8.3% YoY.

Single-family authorizations were at a SAAR of 844,000; this is 2.2% (±1.0%) below the revised April figure of 863,000 (+7.7% YoY). Multi-family: 457,000 (-8.8% MoM; +9.8% YoY). 

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Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May after a downwardly revised April reading on the National Association of Home Builders/Wells Fargo (HMI). This is the fourth time the HMI has reached 70 or higher this year.

Builder confidence in the market for newly-built single-family homes fell two points to 68 in June on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline was due in large part to sharply elevated lumber prices, although sentiment remains on solid footing.

“Builders are optimistic about housing market conditions as consumer demand continues to grow,” said NAHB Chairman Randy Noel. “However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.”

“Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead,” said NAHB Chief Economist Robert Dietz. “However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”

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.