January 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in January at a seasonally adjusted annual rate (SAAR) of 1,567,000 units (1.420 million expected). This is 3.6 percent (±13.3 percent)* below the revised December estimate of 1,626,000 (originally 1.608 million units), but 21.4 percent (±12.2 percent) above the January 2019 SAAR of 1,291,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +25.4%.

Single-family housing starts in January were at a SAAR of 1,010,000; this is 5.9 percent (±11.6 percent)* below the revised December figure of 1,073,000 units (+7.0% YoY). Multi-family starts: 557,000 units (+0.7% MoM; +76.9% 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 1,280,000 units. This is 3.3 percent (±8.4 percent)* below the revised December estimate of 1,323,000 (originally 1.277 million units), but 1.5 percent (±11.7 percent)* above the January 2019 SAAR of 1,261,000 units; the NSA comparison: +1.7% YoY.

Single-family completions were at a rate of 877,000; this is 3.5 percent (±6.8 percent)* below the revised December rate of 909,000 units (-5.3% YoY). Multi-family completions: 403,000 units (-2.7% MoM; +21.3% YoY). 

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Total permits amounted to a SAAR of 1,551,000 units (1.458 million expected). This is 9.2 percent (±2.1 percent) above the revised December rate of 1,420,000 (originally 1.474 million units) and 17.9 percent (±1.3 percent) above the January 2019 SAAR of 1,316,000 units; the NSA comparison: +19.7% YoY.

Single-family permits were at a SAAR of 987,000; this is 6.4 percent (±2.5 percent) above the revised December figure of 928,000 units (+21.2% YoY). Multi-family: 564,000 (+14.6% MoM; +17.4% YoY). 

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Builder confidence in the market for newly-built single-family homes edged one point lower to 74 in February, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The last three monthly readings mark the highest sentiment levels since December 2017.

“Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs,” said NAHB Chairman Dean Mon.

“At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation,” said NAHB Chief Economist Robert Dietz. “And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect.”

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.