May 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in May at a seasonally adjusted annual rate (SAAR) of 974,000 units (1.100 million expected). This is 4.3% (±15.5%)* above the revised April estimate of 934,000 (originally 891,000 units), but 23.2% (±6.2%) below the May 2019 SAAR of 1,268,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -24.4%.

Single-family housing starts in May were at a SAAR of 675,000; this is 0.1% (±11.9%)* above the revised April figure of 674,000 units (-19.3% YoY). Multi-family starts: 299,000 units (+15.0% MoM; -34.1% 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 1,115,000 units. This is 7.3% (±12.3%)* below the revised April estimate of 1,203,000 (originally 1.176 million units) and 9.3% (±9.8%)* below the May 2019 SAAR of 1,230,000 units; the NSA comparison: -10.0% YoY.

Single-family completions were at a SAAR of 791,000; this is 9.8% (±11.5%)* below the revised April rate of 877,000 units (-11.7% YoY). Multi-family completions: 324,000 units (-0.6% MoM; -5.6% YoY). 

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Total permits amounted to a SAAR of 1,220,000 units (1.220 million expected). This is 14.4% (±1.1%) above the revised April rate of 1,066,000 (originally 1.074 million units), but 8.8% (±1.0%) below the May 2019 SAAR of 1,338,000 units; the NSA comparison: -17.2% YoY.

Single-family permits were at a SAAR of 745,000; this is 11.9% (±1.9%) above the revised April figure of 666,000 units (-19.0% YoY). Multi-family: 475,000 (+18.2% MoM; -14.1% YoY). 

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“In a sign that housing stands poised to lead a post-pandemic economic recovery,” wrote NAHB’s Robert Dietz, “builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading above 50 indicates a positive market.

“As the nation reopens, housing is well-positioned to lead the economy forward. Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market. Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods.  At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market,” 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.