December 2019 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in December at a seasonally adjusted annual rate (SAAR) of 1,608,000 units (1.373 million expected). This is 16.9 percent (±12.8 percent) above the revised November estimate of 1,375,000 (originally 1.365 million units) and 40.8 percent (±20.5 percent) above the December 2018 SAAR of 1,142,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +42.8%.

Single-family housing starts in December were at a SAAR of 1,055,000; this is 11.2 percent (±10.4 percent) above the revised November figure of 949,000 units (+30.4% YoY). Multi-family starts: 553,000 units (+29.8% MoM; +70.5% 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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Total completions were at a SAAR of 1,277,000 units. This is 5.1 percent (±15.1 percent)* above the revised November estimate of 1,215,000 (originally 1.188 million units) and 19.6 percent (±14.1 percent) above the December 2018 SAAR of 1,068,000 units; the NSA comparison: +19.8% YoY.

Single-family completions were at a SAAR of 912,000; this is 0.7 percent (±13.5 percent)* above the revised November rate of 906,000 units (+17.5% YoY). Multi-family completions: 365,000 units (+18.1% MoM; +26.7% YoY). 

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Total permits amounted to a SAAR of 1,416,000 units (1.458 million expected). This is 3.9 percent (±1.6 percent) below the revised November rate of 1,474,000 (originally 1.482 million units), but 5.8 percent (±1.1 percent) above the December 2018 SAAR of 1,339,000 units; the NSA comparison: +11.1% YoY.

Single-family permits were at a SAAR of 916,000; this is 0.5 percent (±1.3 percent)* below the revised November figure of 921,000 units (+16.9% YoY). Multi-family: 500,000 (-9.6% MoM; +3.9% YoY). 

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Builder confidence in the market for newly-built single-family homes edged one point lower to 75 in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The last two monthly readings mark the highest sentiment levels since July of 1999. Low interest rates and a healthy labor market combined with a need for additional inventory are setting the stage for further home building gains in 2020.

NAHB Chief Economist Robert Dietz believes that, with the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020. However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes.

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.