October 2018 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in October at a seasonally adjusted annual rate (SAAR) of 1,228,000 units (1.240 million expected). This is 1.5% (±12.9%)* above the revised September estimate of 1,210,000 (originally 1.201 million units), but 2.9% (±10.4%)* below the October 2017 SAAR of 1,265,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -2.1%.

Single-family housing starts in October were at a rate of 865,000; this is 1.8% (±10.8%)* below the revised September figure of 881,000 (-1.5% YoY). Multi-family starts: 363,000 units (+10.3% MoM; -3.5% 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 October were at a SAAR of 1,111,000. This is 3.3% (±10.5%)* below the revised September estimate of 1,149,000 and 6.5% (±9.2%)* below the October 2017 SAAR of 1,188,000 units; the NSA comparison: -6.5% YoY.

Single-family housing completions in October were at a SAAR of 832,000; this is 1.2% (±10.6%)* below the revised September rate of 842,000 (+4.1% YoY). Multi-family completions: 279,000 units (-9.1% MoM; -29.8% YoY). 

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Total permits in October were at a SAAR of 1,263,000 units (1.260 million expected). This is 0.6% (±2.4%)* below the revised September rate of 1,270,000 (originally 1.241 million units) and 6.0% (±1.6%) below the October 2017 SAAR of 1,343,000 units; the NSA comparison: -3.3% YoY.

Single-family authorizations in October were at a rate of 849,000; this is 0.6% (±2.2%)* below the revised September figure of 854,000 (+4.5% YoY). Multi-family: 414,000 (-0.5% MoM; -15.5% YoY). 

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Growing affordability concerns resulted in builder confidence in the market for newly-built single-family homes falling eight points to 60 in November on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Despite the sharp drop, builder sentiment still remains in positive territory.

“Builders report that they continue to see signs of consumer demand for new homes but that customers are taking a pause due to concerns over rising interest rates and home prices,” said NAHB Chairman Randy Noel.

“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” said NAHB Chief Economist Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”

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.