September 2018 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in September at a seasonally adjusted annual rate (SAAR) of 1,201,000 units (1.216 million expected). This is 5.3% (±11.3%)* below the revised August rate of 1,268,000 (originally 1.282 million units) but 3.7% (±12.1%)* above the September 2017 SAAR of 1,158,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +1.6%. 

Single-family housing starts in September were at a SAAR of 871,000; this is 0.9% (±8.9%)* below the revised August figure of 879,000 (+2.3% YoY). Multi-family starts: 330,000 units (-15.2% MoM; 0.0% 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 September were at a SAAR of 1,162,000 units. This is 4.1% (±11.3%)* below the revised August estimate of 1,212,000, but 7.0% (±12.9%)* above the September 2017 SAAR of 1,086,000 units; the NSA comparison: +5.7% YoY.

Single-family completions were at a SAAR of 844,000; this is 8.7% (±8.4%) below the revised August rate of 924,000 (+7.3% YoY). Multi-family completions: 318,000 units (+10.4% MoM; +1.8% YoY). 

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Total permits in September were at a SAAR of 1,241,000 units (1.272 million expected). This is 0.6% (±1.2%)* below the revised August rate of 1,249,000 (originally 1.229 million units) and 1.0% (±1.2%)* below the September 2017 SAAR of 1,254,000 units; the NSA comparison: -6.0% YoY.

Single-family permits were at a SAAR of 851,000; this is 2.9% (±1.2%) above the revised August figure of 827,000 (-2.9% YoY). Multi-family: 390,000 (-7.6% MoM; -13.1% YoY). 

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Builder confidence in the market for newly-built single-family homes rose one point to 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builder confidence levels have held in the high 60s since June.

“Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable.”

“Favorable economic conditions and demographic tailwinds should continue to support demand, but housing affordability has become a challenge due to ongoing price and interest rate increases,” said NAHB Chief Economist Robert Dietz. “Unless housing affordability stabilizes, the market risks losing additional momentum as we head into 2019.”

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.