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New Housing Starts Eased in December, but Up 10.8 Percent in 2015

By | Economy, Shopfloor Economics | No Comments

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts eased 2.5 percent, down from an annualized 1,179,000 in November to 1,149,000 in December.  This was near the average observed in the second half of 2015, which was 1,146,000, up from an average of 1,068,000 in the first half of the year. Housing starts averaged 1,111,200 for 2015 as a whole, up 10.8 percent from the 2014 average of 1,003.300. As such, it reflects gradual improvements in residential construction over the longer term, even with the slight pullback in December activity.

Reduced single-family housing starts (down from 794,000 to 768,000) helped to explain the decrease in December, with multifamily activity also off marginally (down from 385,000 to 381,000). On the positive side, single-family residential construction in December was not far from November’s post-recessionary high, and starts in the single-family segment were up 10.4 percent in 2015. Multifamily activity has been more volatile in 2015, ranging from a low of 300,000 in February to a high of 466,000 in September. Yet, multifamily starts have also trended higher, up 11.3 percent for the year.

Housing permits also provided some encouragement, up 12.0 percent in 2015 from the average seen in 2014. Yet, permits edged lower for the month, down from 1,282,000 in November to 1,232,000 in December. The underlying data were mixed, with single-family permits higher (up from 727,000 to 740,000) and multifamily activity lower (down from 555,000 to 492,000). The single-family permits figure was the highest since December 2007, which was the first official month of the Great Recession. Since housing permits can be seen as a proxy of future residential construction activity, this is a real sign of progress and comfort for 2016.

This perhaps helps to explain why homebuilders remain optimistic, as noted in the National Association of Home Builders (NAHB) and Wells Fargo report released yesterday. The National Association of Home Builders (NAHB) and Wells Fargo said that the Housing Market Index (HMI) was unchanged in January at 60. Numbers over 50 indicate that builders are more positive than negative on net in their views of the housing market. January’s reading was the seventh consecutive month with the HMI at 60 or higher, suggesting that home builders remain mostly optimistic about the current pace of growth. Still, the headline number has decelerated after reaching a 10-year high of 65 in October, with sentiment easing a bit since then. Data were weakest in the Northeast and strongest in the West, and confidence picked up a little in January in the Midwest.

Moving forward, home builders remain upbeat about single-family sales over the next six months. While the sales index of expected single-family activity has decelerated from 75 in October to 63 in January, this continues to indicate strong demand expectations in the outlook.

housing

New Housing Starts Jumped 10.5 Percent in November

By | Economy, Shopfloor Economics | No Comments

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts rebounded in November after a relatively soft October. New residential construction starts rose from 1,062,000 units at the annual rate in October to 1,173,000 units in November. This was just shy of the 1,207,000 pace seen in September. This report continues to reflect upward movement in residential activity, with housing starts averaging 1,154,000 over the past six months, up from 1,046,000 in the six months prior to that. Indeed, housing starts have risen a healthy 16.5 percent year-over-year, up from 1,007,000 units in November 2014.

Single-family (up from 714,000 to 768,000) and multifamily (up from 348,000 to 405,000) housing starts were both higher for the month, with single-family activity rising to its highest level since January 2008. On a year-over-year basis, single-family and multifamily starts have increased 7.6 percent and 16.4 percent, respectively. Read More

Housing Starts Once Again Exceeded 1.2 Million in September

By | Economy, General, Shopfloor Economics | No Comments

The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts once again exceeded 1.2 million in September. New residential construction starts were up from an annualized 1,132,000 units in August to 1,206,000 units in September, which kept residential activity near the eight-year high of 1,211,000 units in June. Overall, this report shows continued progress in the housing market. Indeed, housing starts have risen a healthy 17.5 percent year-over-year, up from 1,026,000 units in September 2014.

Still, much of the movement in recent months in the headline starts number has come from the multifamily segment, up from 394,000 in August to 466,000 in September. Illustrating the volatility in the data, multifamily starts have ranged from a low of 300,000 in February to a high of 524,000 in June, with the latter representing the fastest pace since November 1987. Meanwhile, single-family starts have plodded generally higher without much volatility from month to month, up from 738,000 in August to 740,000 in September. Since bottoming out at 600,000 units in February, single-family starts rose to a 7½-year high in July with 759,000 units. Over the past three months, single-family starts have averaged 745,667, indicating strong momentum year-to-date. On a year-over-year basis, single-family starts have risen 12.0 percent.

In contrast to the housing starts data, residential permitting was off this month. New housing permits declined from 1,161,000 units at the annual rate in August to 1,103,000 units in September. This data has averaged 1,131,333 units over the past three months (July through September), representing a fall-off from the more-robust paces of 1,250,000 and 1,337,000 units in May and June, respectively. Before getting too worked up over this, however, it is important to note that much of the recent decline stems from weaker multifamily permitting. In June, permits soared to 645,000 units, skewed higher by the expiration of tax credits in New York. Since then, they have settled lower, down from 462,000 in August to 406,000 in September.

On a more positive note, single-family housing permits edged down a little, down from 699,000 in August to 697,000 in September. This was up from 626,000 in February and 653,000 in September 2014. As such, year-over-year growth for single-family permitting was up 6.7 percent, a fairly decent pace. This should bode well moving forward for new residential construction.

This should help to explain the strong confidence numbers from the National Association of Home Builders (NAHB) and Wells Fargo, which were released yesterday. The Housing Market Index rose from 61 in September to 64 in October, its highest level since October 2005. Index values over 50 suggest that home builders are more confident than not in their economic outlook, and the HMI has now exceeded that threshold for 16 straight months. Indeed, this measure has trended in the right direction over the past 12 months, up from a reading of 54 one year ago. Nonetheless, NAHB Chairman Tom Woods also offered some words of caution. He said, “…our members continue to tell us there are still pockets of softness in some markets across the nation, and that they face challenges regarding the availability of lots and labor.”

The largest gains in confidence in October stemmed from the Northeast and the West, with softer data coming out of the Midwest. Yet, home builders were mostly upbeat about single-family home sales over the next six months. The forward-looking index of sales activity rose from 68 to 75, its highest point since August 2005. That should provide some encouragement for the residential housing moving ahead.

Chad Moutray is the chief economist, National Association of Manufacturers.

Housing Starts Exceed 1.2 Million, Reach their Fastest Pace since October 2007

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts now exceed 1.2 million, reaching their fastest pace in July since October 2007. New housing starts edged marginally higher, up from a revised 1,204,000 units at the annual rate in June to 1,206,000 in July. (June’s figure was originally estimated to be 1,174,000.) This report suggests that the housing market has gained some steam, improving from softness earlier in the year. To illustrate this progress, housing starts averaged 1,039,200 through the first five months of 2015. In addition, housing starts have increased 10.8 percent year-over-year. Read More

Housing Starts and Permits Rose Sharply in June on Strong Multi-Family Gains

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts and permits each rose sharply in June. New housing starts increased from 1,069,000 units at the annual rate in May to 1,174,000 in June. This was the fastest pace of housing starts growth since November 2007, the month preceding the start of the Great Recession. This was stronger than the consensus estimate of roughly 1.1 million starts for the month, and it was an encouraging sign that the market has gained some momentum after the springtime lull in activity seen earlier in the year. Read More

Monday Economic Report – June 22, 2015

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Here is the summary for this week’s Monday Economic Report: 

Last week, one media outlet reported that manufacturing has been in a “technical recession” for the past six months. I am more hesitant to use the R-word to describe the sector’s performance year-to-date, and in my view, this description somewhat overstates the significance of broader market trends, particularly for expectations moving forward. At the same time, manufacturing production has declined since late last year, as illustrated in the graphic below. A number of significant economic headwinds have reduced output in four of the past six months, reducing the year-over-year pace of growth in the sector from 4.5 percent in November to 1.8 percent in May. Capacity utilization has also declined for five consecutive months, down from 78.1 percent in December to 77.0 percent in May. Read More

Housing Starts Pull Back Somewhat, but Permits Rise to Fastest Pace since August 2007

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The Census Bureau and the U.S. Department of Housing and Urban Development said that new housing starts were somewhat lower in May than expected. New housing starts declined from an upward-revised 1,165,000 units at the annual rate in April to 1,036,000 in May, which was below the consensus estimate of around 1.1 million. Both single-family (down from 719,000 to 680,000) and multi-family (down from 446,000 to 356,000) activity were both worse for the month.

On the positive side, starts continue to show improvement from the 900,000 pace seen just three months ago – a sign that the market has largely recovered from its weather-related softness earlier in the year. Indeed, part of the decline in May could simply be a function of the robustness in April’s reading (the highest since October 2007), with the data getting somewhat ahead of the underlying trend line. A pullback of some sort was probably inevitable. My current forecast is for 1.16 million housing starts by the end of this year. Read More

Monday Economic Report – May 26, 2015

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Here is the summary for this week’s Monday Economic Report:

The minutes of the April 28–29 Federal Open Market Committee (FOMC) meeting highlighted the nuance that many of us see in the economy right now. The Federal Reserve highlighted a number of challenges facing consumers and businesses in the early months of 2015, noting how these headwinds have dampened overall activity year-to-date. On the other hand, the FOMC felt that slowing economic growth was largely due to “transitory factors,” with its outlook mostly unchanged for the rest of this year. The Federal Reserve projects growth of 2.3 to 2.7 percent in 2015, and it expects the unemployment rate to fall to 5.0 to 5.2 percent.   Read More

Housing Starts Rebounded Strongly in April, Growing at Fastest Pace since November 2007

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The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity rebounded strongly in April. New housing starts jumped from an annualized 944,000 in March to 1,135,000 in April, its fastest pace since November 2007, the month before the start of the Great Recession. As such, it appears that the housing market has begun to move beyond the weather-related softness seen in some regions of the country in February and March. On a year-over-year basis, housing starts have risen 9.2 percent since April 2014.

Both single-family (up from 628,000 to 733,000) and multi-family (up from 316,000 to 402,000) housing starts were higher in April, which was encouraging. The single-family growth rates was the fastest since January 2008, with multi-family starts reaching a nine-month high. Read More

Housing Starts Remained Weak in March

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The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity remained weak for the second straight month. New housing starts increased 2.0 percent, up from an annualized 908,000 in February to 926,000 in March. Each of those figures, however, remain below the 1,072,000 rate observed in January. They reflect reduced activity in every region of the country, most notably in the Midwest, Northeast and West. Poor weather conditions have been a factor in some regions, and along those lines, starts in the Midwest and Northeast rebounded somewhat as they recovered from heavy snowstorms the month before. Read More