Wednesday, May 16, 2007

New Residential Construction Report: April 2007

Today’s New Residential Construction Report continues to indicate significant weakness in the nations housing markets and for residential construction.

In particular, housing permits, the report most leading of indicators, again indicates substantial weakness in future construction activity both nationally and across every reported region.

In fact, nationally and for all product types, permits fell by 8.9% compared to March, the largest monthly decline since January 1990.

On a year-over-year basis, permits continue to decline substantially, even on the back of the significant declines seen last year.

To illustrate the extent to which permits and starts have declined, I have created the following charts (click for larger versions) that show the percentage changes of the current values compared to the peak years of 2004 and 2005.

Notice that on each chart the line is essentially combining the year-over-year changes seen in 2005 and 2006 and shows virtually every measure trending down precipitously.

Although year-over-year declines to permits, for example, have not accelerated measurably from September 2006, the fact that they continue to decline roughly 30% should provide a solid indication that they are by no means stabilizing.



As predicted, housing completions are now declining significantly on a year-over-year basis indicating that the contraction in construction activity may soon be reflected by a substantial drop-off in construction related jobs as older projects reach completion and newer projects start at a far slower pace.

Here are the statistics outlined in today’s report:

Housing Permits

Nationally

  • Single family housing permits down 6.0% from March, down 28.8% as compared to April 2006
Regionally

  • For the Northeast, single family housing down 1.1% from March, down 18.4% as compared to April 2006.
  • For the West, single family housing permits down 7.7% from March, down 30.8% as compared to April 2006.
  • For the Midwest, single family housing permits down 6.8% from March, down 27.1% as compared to April 2006.
  • For the South, single family housing permits down 5.7% from March, down 29.7% compared to April 2006.
Housing Starts

Nationally

  • Single family housing starts up 1.6% from March, down 18.9% as compared to April 2006.
Regionally

  • For the Northeast, single family housing starts up 17.4% from March, down 19.4% as compared to April 2006.
  • For the West, single family housing starts up 8.0% from March, down 15.3% as compared to April 2006.
  • For the Midwest, single family housing starts down 13.8% from March, down 40.8% as compared to April 2006.
  • For the South, single family housing starts up 1.1% from March, down 12.0% as compared to April 2006.
Housing Completions

Nationally

  • Single family housing completions down 3.4% from March, down 26.9% as compared to April 2006.
Regionally

  • For the Northeast, single family housing completions down 3.5% from March, down 41.0% as compared to April 2006.
  • For the West, single family housing completions down 6.4% from March, down 29.3% as compared to April 2006.
  • For the Midwest, single family housing completions down 6.9% from March, down 36.5% as compared to April 2006.
  • For the South, single family housing completions down 1.0% from March, down 20.1% as compared to April 2006.
Keep in mind that this particular report does NOT factor in the cancellations that have been widely reported to be occurring in new construction.

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