March 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in March at a seasonally adjusted annual rate (SAAR) of 1,216,000 units (1.320 million expected). This is 22.3% (±12.2%) below the revised February estimate of 1,564,000 (originally 1.599 million units), but 1.4% (±12.7%)* above the March 2019 SAAR of 1,199,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +1.9%.

Single-family housing starts in March were at a SAAR of 856,000; this is 17.5% (±13.1%) below the revised February figure of 1,037,000 units (+2.9% YoY). Multi-family starts: 360,000 units (-31.7% MoM; -0.4% 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 1,227,000 units. This is 6.1% (±12.0%)* below the revised February estimate of 1,307,000 (originally 1.316 million units) and 9.0% (±12.4%)* below the March 2019 SAAR of 1,348,000 units; the NSA comparison: -8.6% YoY.

Single-family housing completions were at a SAAR of 863,000; this is 15.0% (±11.6%) below the revised February rate of 1,015,000 units (-9.6% YoY). Multi-family completions: 364,000 units (+24.7% MoM; -6.1% YoY). 

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Total permits amounted to a SAAR of 1,353,000 units (1.300 million expected). This is 6.8% (±1.1%) below the revised February rate of 1,452,000 (originally 1.464 million units), but 5.0% (±2.4%) above the March 2019 SAAR of 1,288,000 units; the NSA comparison: +9.7% YoY.

Single-family permits were at a SAAR of 884,000; this is 12.0% (±1.9%) below the revised February figure of 1,005,000 units (+13.5% YoY). Multi-family: 469,000 (+4.9% MoM; +2.7% YoY). 

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Reflecting the growing effects of the COVID-19 pandemic, builder confidence in the market for newly-built single-family homes plunged 42 points in April to 30, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The decline in April was the largest single monthly change in the history of the index and marks the lowest builder confidence reading since June 2012. It is also the first time that builder confidence has been in negative territory (below 50) since June 2014.

“This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities,” said NAHB Chairman Dean Mon. “Meanwhile, there continues to be some confusion over builder eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to. NAHB is working with the White House, Treasury and Congress to get the broadest builder participation possible. Home building remains an essential business throughout most of the nation, and as the pandemic shows signs of easing in the weeks ahead, buyers should return to the marketplace.”

“Before the pandemic hit, the housing market was showing signs of strength with January and February new home sales at their highest pace since the Great Recession,” said NAHB Chief Economist Robert Dietz. “To show how hard and fast this outbreak has hit the housing sector, a recent poll of our members reveals that 96% reported that virus mitigation efforts were hurting buyer traffic. While the virus is severely disrupting residential construction and the overall economy, the need and demand for housing remains acute. As social distancing and other mitigation efforts show signs of easing this health crisis, we expect that housing will play its traditional role of helping to lead the economy out of a recession later in 2020.”

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.