July 2018 Residential Permits, Starts and Completions

Click image for larger view 

Click image for larger view

Builders started construction of privately-owned housing units in July at a seasonally adjusted annual rate (SAAR) of 1,168,000 units (1.271 million expected). This is 0.9% (±11.5%)* above the revised June estimate of 1,158,000 (originally 1.173 million units), but 1.4% (±11.7%)* below the July 2017 SAAR of 1,185,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -1.7%.

Single-family housing starts in July were at a SAAR of 862,000; this is 0.9% (±9.6%)* above the revised June figure of 854,000 units (+3.0% YoY). Multi-family starts: 306,000 units (+0.7% MoM; -13.1% YoY).

* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category. 

Click image for larger view 

Click image for larger view

Completions in July were at a SAAR of 1,188,000 units. This is 1.7% (±10.9%)* below the revised June estimate of 1,209,000 and 0.8% (±11.3%)* below the July 2017 SAAR of 1,197,000 units; the NSA comparison: -1.3% YoY.

Single-family housing completions were at a SAAR of 814,000; this is 5.2% (±7.8%)* below the revised June rate of 859,000 (-4.6% YoY). Multi-family completions: 374,000 units (+6.9% MoM; +5.8% YoY). 

Click image for larger view 

Click image for larger view

Total permits in July were at a SAAR of 1,311,000 units (1.304 million expected). This is 1.5% (±1.3%) above the revised June rate of 1,292,000 (originally 1.273 million units) and 4.2% (±1.7%) above the July 2017 SAAR of 1,258,000 units; the NSA comparison: +10.8% YoY.

Single-family authorizations were at a SAAR of 869,000; this is 1.9% (±1.4%) above the revised June figure of 853,000 (+12.1% YoY). Multi-family: 442,000 (+0.7% MoM; +8.0% YoY). 

Click image for larger view 

Click image for larger view

Builder confidence in the market for newly-built single-family homes edged down one point to a solid 67 reading in August on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). “The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” said NAHB Chairman Randy Noel. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”

“The solid economic expansion and firm job market should spur demand for new single-family homes in the months ahead,” said NAHB Chief Economist Robert Dietz. “Meanwhile, builders continue to monitor how tariffs and the growing threat of a trade war are affecting key building material prices, including lumber. These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges, as indicated by the latest quarterly reading of the NAHB/Wells Fargo Housing Opportunity Index.”

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.