Friday, January 19, 2007

December's New Construction Report

The Bulls on Wall Street and in the real estate industry are getting ever more delirious, grabbing desperately yet confidently for any piece of evidence that might suggest that the housing decline has bottomed.

Driving to work yesterday I was surprised to hear CNBC report that the newly released “New Residential Construction Report” showed the largest monthly increases to permits and starts for a December in over 50 years.

As usual though, a closer look at the report reveals CNBC’s complete inability to simply read a report and present its findings without bias.

Firstly, EVERY year-over-year change to permits and starts both nationally and regionally were DOWN high double digits with the smallest decline being 14%!

Additionally, permits, arguably the most important indicator of the report showed declines perfectly in-line with the existing weakening trend.

It appears that CNBC had been a simply bamboozled by looking to closely at the overall permits and starts figures which appeared to be buoyed by unusually strong increases to multi-family construction.

If they had simply viewed the single family permits and starts figures they would have seen that December was completely in-line with the existing downward trend.

Here are the statistics outlined in today’s report:

Housing Permits

Nationally

  • Single family housing permits up 1.2% from November, down 29.1% as compared to December 2005
Regionally

  • For the Northeast, single family housing permits up 6.7% from November, down 21.5% as compared to December 2005.
  • For the West, single family housing permits down 0.4% from November, down 39.8% as compared to December 2005.
  • For the Midwest, single family housing permits down 3.8% from November, down 26.8% as compared to December 2005.
  • For the South, single family housing permits up 2.6% from November, down 25.4% compared to December 2005.
Housing Starts

Nationally

  • Single family housing starts down 4.1% from November, down 24.7% as compared to December 2005.
Regionally

  • For the Northeast, single family housing starts down 3.5% from November, down 14.0% as compared to December 2005.
  • For the West, single family housing starts went unchanged from November, down 23.5% as compared to December 2005.
  • For the Midwest, single family housing starts down 4.7% from November, down 26.4% as compared to December 2005.
  • For the South, single family housing starts down 5.7% from November, down 26.3% as compared to December 2005.
Housing Completions

Nationally

  • Single family housing completions down 0.3% from November, down 8.7% as compared to December 2005.
Regionally

  • For the Northeast, single family housing completions up 9.1% from November, down 12.4% as compared to December 2005.
  • For the West, single family housing completions down 2.5% from November, down 19.3% as compared to December 2005.
  • For the Midwest, single family housing completions down 7.2% from November, down 16.0% as compared to December 2005.
  • For the South, single family housing completions up 1.8% from November, up 0.5% as compared to December 2005.
Keep in mind that this particular report does NOT factor in the cancellations that have been widely reported to be occurring in new construction.

As further reports are released, cancellations should show an even greater effect on permitting, starts and completions.

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