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Wednesday, November 18, 2020

October 2020 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in October at a seasonally adjusted annual rate (SAAR) of 1,530,000 units (1.460 million expected). This is 4.9% (±11.1%)* above the revised September estimate of 1,459,000 (originally 1.415 million units) and 14.2% (±8.8%) above the October 2019 SAAR of 1,340,000 units; the not-seasonally adjusted YoY change (shown in the table above) was +15.0%.

Single-family housing starts in October were at a rate of 1,179,000; this is 6.4% (±8.7%)* above the revised September figure of 1,108,000 units (+31.5% YoY). Multi-family: 351,000 units (0.0% MoM; -18.4% 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 1,343,000. This is 4.5% (±9.5%)* below the revised September estimate of 1,406,000 (originally 1.413 million units), but 5.4% (±10.7%)* above the October 2019 SAAR of 1,274,000 units; the NSA comparison: +6.1% YoY.

Single-family completions were at a SAAR of 883,000; this is 3.4% (±8.4%)* below the revised September rate of 914,000 units (-3.7% YoY). Multi-family: 460,000 units (-6.5% MoM; +33.6% YoY).

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Total permits amounted to a SAAR of 1,545,000 units (1.560 million expected). This is virtually unchanged (±1.3%)* from the revised September rate of 1,545,000 (originally 1.553 million units), but 2.8% (±1.6%) above the October 2019 SAAR of 1,503,000 units; the NSA comparison: -2.1% YoY.

Single-family permits were at a rate of 1,120,000; this is 0.6% (±1.0%)* above the revised September figure of 1,113,000 units (+16.4% YoY). Multi-family: 425,000 units (-1.6% MoM; -29.5% YoY).

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In another sign that housing continues to lead the economy forward, builder confidence in the market for newly-built single-family homes increased five points to 90 in November, shattering the previous all-time of 85 recorded in October, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). Builder confidence levels have hit successive all-time highs over the past three months.

“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” said NAHB Chairman Chuck Fowke. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

“Another record high for the HMI reflects that housing is a bright spot for the economy,” said NAHB Chief Economist Robert Dietz. “However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front. In the short run, the shift of housing demand to lower density markets such as suburbs and exurbs with ongoing low resale inventory levels is supporting demand for home building.”

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.

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