August 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in August at a seasonally adjusted annual rate (SAAR) of 1,416,000 units (1.486 million expected). This is 5.1% (±9.6%)* below the revised July estimate of 1,492,000 (originally 1,496,000 units), but 2.8% (±10.3%)* above the August 2019 SAAR of 1,377,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +5.2%.

Single-family housing starts in August were at a SAAR of 1,021,000; this is 4.1% (±8.7%)* above the revised July figure of 981,000 units (+15.2% YoY). Multi-family starts: 395,000 units (-22.7% MoM; -15.0% 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 1,233,000 units. This is 7.5% (±14.2%)* below the revised July estimate of 1,333,000 (originally 1.280 million units) and 2.4% (±11.9%)* below the August 2019 SAAR of 1,263,000 units; the NSA comparison: -3.4% YoY.

Single-family completions were at a SAAR of 912,000; this is 4.4% (±19.1%)* below the revised July SAAR of 954,000 units (-3.6% YoY). Multi-family completions: 321,000 units (-15.3% MoM; -3.0% YoY).

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Total permits amounted to a SAAR of 1,470,000 units (1.530 million expected). This is 0.9% (±1.4%)* below the revised July rate of 1,483,000 (originally 1.495 million units) and 0.1% (±1.5%)* below the August 2019 SAAR of 1,471,000 units; the NSA comparison: -4.6% YoY.  

Single-family permits were at a SAAR of 1,036,000; this is 6.0% (±1.3%) above the revised July figure of 977,000 units (+11.4% YoY). Multi-family: 434,000 (-14.2% MoM; -29.7% YoY).

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In a strong signal that housing is leading the economic recovery, builder confidence in the market for newly-built single-family homes increased five points to hit an all-time high of 83 in September, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). The previous highest reading of 78 in the 35-year history of the series was set in August and also matched in December 1998.

“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” said NAHB Chairman Chuck Fowke. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”

“Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home,” said NAHB Chief Economist Robert Dietz. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”

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.