April 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in April at a seasonally adjusted annual rate (SAAR) of 891,000 units (968,000 expected). This is 30.2% (±11.0%) below the revised March estimate of 1,276,000 (originally 1.216 million units) and 29.7% (±8.1%) below the April 2019 SAAR of 1,267,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -30.4%.

Single-family housing starts in April were at a rate of 650,000; this is 25.4% (±9.6%) below the revised March figure of 871,000 units (-26.0% YoY). Multi-family starts: 241,000 units (-40.5% MoM; -40.9% 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 1,176,000 units. This is 8.1% (±13.5%)* below the revised March estimate of 1,279,000 (originally 1.307 million units) and 11.8% (±9.9%) below the April 2019 SAAR of 1,334,000 units; the NSA comparison: -11.3% YoY.

Single-family housing completions were at a SAAR of 865,000; this is 4.9% (±16.7%)* below the revised March rate of 910,000 units (-6.5% YoY). Multi-family completions: 311,000 units (-15.7% MoM; -22.6% YoY). 

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Total permits amounted to a SAAR of 1,074,000 units (1.033 million expected). This is 20.8% (±0.9%) below the revised March rate of 1,356,000 (originally 1.353 million units) and 19.2% (±0.9%) below the April 2019 SAAR of 1,330,000 units; the NSA comparison: -20.0% YoY.

Single-family permits were at a SAAR of 669,000; this is 24.3% (±1.6%) below the revised March figure of 884,000 units (-16.6% YoY). Multi-family: 405,000 (-14.2% MoM; -26.0% YoY). 

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“In a signal that the housing market is showing signs of stabilizing and gradually moving forward in the wake of the COVID-19 pandemic, builder confidence in the market for newly-built single-family homes increased seven points to 37 in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI),” wrote NAHB’s Robert Dietz. “The rise in builder sentiment follows the largest single monthly decline in the history of the index in April.”

“The designation of home construction as an essential business during the crisis helped keep most residential construction workers on the job, which is reflected in the May HMI. At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings. Jurisdictions are also adapting to the new environment with third-party and virtual inspection rules.

“Low interest rates are helping to sustain demand. As many states and localities across the nation lift stay-at-home orders and more furloughed workers return to their jobs, we expect this demand will strengthen. Other indicators that suggest a housing rebound include mortgage application data that has posted four weeks of gains and signs that buyer traffic has improved in housing markets in recent weeks. However, high unemployment and supply-side challenges including builder loan access and building material availability are near-term limiting factors,” Dietz concluded.

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.