September 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in September at a seasonally adjusted annual rate (SAAR) of 1,415,000 units (1.451 million expected). This is 1.9% (±8.8%)* above the revised August estimate of 1,388,000 (originally 1,416,000 units) and 11.1% (±11.3%)* above the September 2019 SAAR of 1,274,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +10.4%.

Single-family housing starts in September were at a SAAR of 1,108,000; this is 8.5% (±9.2%)* above the revised August figure of 1,021,000 units (+23.8% YoY). Multi-family: 307,000 units (-16.3% MoM; -19.9% 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 1,413,000. This is 15.3% (±11.4%) above the revised August estimate of 1,226,000 (originally 1.233 million units) and 25.8% (±11.5%) above the September 2019 SAAR of 1,123,000 units; the NSA comparison: +25.8% YoY.

Single-family completions were at a SAAR of 921,000; this is 2.1% (±9.0%)* above the revised August rate of 902,000 units (+8.6% YoY). Multi-family: 492,000 units (+51.9% MoM; +79.1% YoY).

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Total permits amounted to a SAAR of 1,553,000 units (1.500 million expected). This is 5.2% (±1.6%) above the revised August rate of 1,476,000 (originally 1.470 million units) and 8.1% (±1.8%) above the September 2019 SAAR of 1,437,000 units; the NSA comparison: +13.4% YoY.

Single-family permits were at a rate of 1,119,000; this is 7.8% (±1.1%) above the revised August figure of 1,038,000 units (+32.5% YoY). Multi-family: 434,000 units (-0.9% MoM; -16.2% YoY).

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In a further show of strength for the housing sector, builder confidence in the market for newly-built single-family homes increased two points to 85 in October, further surpassing the previous all-time high of 83 recorded in September, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). These are the first two months the index has ever been above 80.

“Traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study and other purposes in this Covid-era,” said NAHB Chairman Chuck Fowke. “However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.”

“The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns,” added NAHB Chief Economist Robert Dietz. “NAHB analysis…showed that new single-family home sales are outpacing starts by a historic margin. Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of months’ supply.”

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.