June 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in June at a seasonally adjusted annual rate (SAAR) of 1,186,000 units (1.190 million expected). This is 17.3% (±11.0%) above the revised May estimate of 1,011,000 (originally 974,000 units), but 4.0% (±9.1%)* below the June 2019 SAAR of 1,235,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -2.5%.

Single-family housing starts in June were at a SAAR of 831,000; this is 17.2% (±10.0%) above the revised May figure of 709,000 units (-1.6% YoY). Multi-family starts: 355,000 units (+17.5% MoM; -5.0% 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 1,225,000 units. This is 4.3% (±12.2%)* above the revised May estimate of 1,174,000 (originally 1.115 million units) and 5.1% (±11.9%)* above the June 2019 SAAR of 1,166,000 units; the NSA comparison: +4.8% YoY.

Single-family completions were at a SAAR of 910,000; this is 9.6% (±15.2%)* above the revised May rate of 830,000 units (+4.2% YoY). Multi-family completions: 315,000 units (-8.4% MoM; +6.7% YoY).

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Total permits amounted to a SAAR of 1,241,000 units (1.300 million expected). This is 2.1% (±1.2%) above the revised May rate of 1,216,000 (originally 1.220 million units), but 2.5% (±1.7%) below the June 2019 SAAR of 1,273,000 units; the NSA comparison: +7.4% YoY.

Single-family permits were at a SAAR of 834,000; this is 11.8% (±2.0%) above the revised May figure of 746,000 units (+9.7% YoY). Multi-family: 407,000 (-13.4% MoM; +2.7% YoY).

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In a strong signal that the housing market is ready to lead a post-COVID economic recovery, builder confidence in the market for newly-built single-family homes jumped 14 points to 72 in July, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The HMI now stands at the solid pre-pandemic reading in March before the outbreak affected much of the nation.

“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke.  “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”

“While the housing market is clearly rebounding, challenges exist,” said NAHB Chief Economist Robert Dietz. “Lumber prices are at a two-year high and builders are reporting rising costs for other building materials while lot and skilled labor availability issues persist. Nonetheless, the important story of the changing geography of housing demand is benefiting new construction. New home demand is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real.”

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.