July 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in July at a seasonally adjusted annual rate (SAAR) of 1,496,000 units (1.240 million expected). This is 22.6 percent (±14.7 percent) above the revised June estimate of 1,220,000 (originally 1,186,000 units) and 23.4 percent (±12.4 percent) above the July 2019 SAAR of 1,212,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +22.1%.

Single-family housing starts in July were at a SAAR of 940,000; this is 8.2 percent (±10.3 percent)* above the revised June figure of 869,000 units (+6.6% YoY). Multi-family starts: 556,000 units (+58.4% MoM; +64.8% 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 3.6 percent (±14.9 percent)* above the revised June estimate of 1,236,000 (originally 1.225 million units) and 1.7 percent (±12.8 percent)* above the July 2019 SAAR of 1,258,000 units; the NSA comparison: +2.2% YoY.

Single-family completions were at a SAAR of 909,000; this is 1.8 percent (±16.8 percent)* below the revised June rate of 926,000 units (-0.7% YoY). Multi-family completions: 371,000 units (+19.7% MoM; +8.9% YoY).

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Total permits amounted to a SAAR of 1,495,000 units (1.300 million expected). This is 18.8 percent (±1.1 percent) above the revised June rate of 1,258,000 (originally 1.241 million units) and 9.4 percent (±1.5 percent) above the July 2019 rate of 1,366,000 units; the NSA comparison: +11.9% YoY.

Single-family permits were at a rate of 983,000; this is 17.0 percent (±1.2 percent) above the revised June figure of 840,000 units (+16.8% YoY). Multi-family: 512,000 (+22.5% MoM; +2.8% YoY).

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In a sign that housing continues to lead the economy forward, builder confidence in the market for newly-built single-family homes increased six points to 78 in August, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The HMI now stands at its highest reading in the 35-year history of the series, matching the record that was set in December 1998.

“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs as measured on the HMI,” said NAHB Chairman Chuck Fowke. “However, the V-shaped recovery for housing has produced a staggering increase for lumber prices, which have more than doubled since mid-April. Such cost increases could dampen momentum in the housing market this fall, despite historically low interest rates.”

“Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” said NAHB Chief Economist Robert Dietz. “Single-family construction is benefiting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”

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.