August 2018 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in August were at a seasonally adjusted annual rate (SAAR) of 1,282,000 units (1.240 million expected). This is 9.2% (±11.4%)* above the revised July estimate of 1,174,000 (originally 1.168 million units) and 9.4% (±9.4%) above the August 2017 SAAR of 1,172,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +10.5%.

Single-family housing starts in August were at a SAAR of 876,000; this is 1.9% (±9.7%)* above the revised July figure of 860,000 units (+1.3% YoY). Multi-family starts: 406,000 units (+29.3% MoM; +40.0% 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 August were at a SAAR of 1,213,000 units. This is 2.5% (±9.7%)* above the revised July estimate of 1,183,000 and 11.2% (±11.4%)* above the August 2017 SAAR of 1,091,000 units; the NSA comparison: +9.4% YoY.

Single-family were at a SAAR of 923,000; this is 11.6% (±12.1%)* above the revised July rate of 827,000 (+24.4% YoY). Multi-family completions: 290,000 units (-18.5% MoM; -17.5% YoY). 

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Total permits in August were at a SAAR of 1,229,000 units (1.320 million expected). This is 5.7% (±1.6%) below the revised July rate of 1,303,000 (originally 1.311 million units) and 5.5% (±1.6%) below the August 2017 SAAR of 1,300,000 units; the NSA comparison: -6.0% YoY.

Single-family authorizations were at a SAAR of 820,000; this is 6.1% (±1.7%) below the revised July figure of 873,000 (+1.6% YoY). Multi-family: 409,000 (-4.9% MoM; -18.7% YoY). 

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Builder confidence in the market for newly-built single-family homes remained unchanged at a solid 67 reading in September on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). “Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market,” said NAHB Chairman Randy Noel. “The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced.”

“A growing economy and rising incomes combined with increasing household formations should boost demand for new single-family homes moving forward,” said NAHB Chief Economist Robert Dietz. “However, housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish. Interest rates are also forecasted to keep rising.”

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.