January 2019 Residential Permits, Starts and Completions

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Builders started construction of privately-owned housing units in January at a seasonally adjusted annual rate (SAAR) of 1,230,000 units (1.170 million expected). This is 18.6% (±26.6%)* above the revised December estimate of 1,037,000 (originally 1.078 million units), but 7.8% (±12.7%)* below the January 2018 SAAR of 1,334,000 units; the not-seasonally adjusted YoY change (shown in the table above) was -9.8%.

Single-family housing starts were at a SAAR of 926,000; this is 25.1% (±29.0%)* above the revised December figure of 740,000 (+1.8% YoY). Multi-family starts: 304,000 units (+2.4% MoM; -31.9% 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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Completions in January were at a SAAR of 1,244,000. This is 27.6% (±13.5%) above the revised December estimate of 975,000 (originally 1.097 million units) and 2.1% (±12.2%)* above the January 2018 SAAR of 1,218,000 units; the NSA comparison: +3.3% YoY.

Single-family housing completions were at a SAAR of 914,000; this is 30.2% (±14.4%) above the revised December rate of 702,000 (+7.2% YoY). Multi-family completions: 330,000 units (+20.9% MoM; -6.2% YoY). 

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Total permits were at a SAAR of 1,345,000 units (1.280 million expected). This is 1.4% (±0.8%) above the revised December rate of 1,326,000 (originally 1.326 million units), but 1.5% (±1.0%) below the January 2018 rate of 1,366,000 units; the NSA comparison: +0.2% YoY.

Single-family permits were at a SAAR of 812,000; this is 2.1% (±1.0%) below the revised December figure of 829,000 (-7.1% YoY). Multi-family: 533,000 (+7.2% MoM; +13.2% YoY). 

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Builder confidence in the market for newly-built single-family homes rose four points to 62 in February, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” said NAHB Chairman Randy Noel. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”

February marked the second consecutive month in which all the HMI indices posted gains. The index measuring current sales conditions rose three points to 67, the component gauging expectations in the next six months increased five points to 68 and the metric charting buyer traffic moved up four points to 48.

“Builder confidence levels moved up in tandem with growing consumer confidence and falling interest rates,” said NAHB Chief Economist Robert Dietz. “The five-point jump on the six-month sales expectation for the HMI is due to mortgage interest rates dropping from about 5% in November to 4.4% this week. However, affordability remains a critical issue. Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points.”

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.