Today’s New Residential Construction Report continues to indicate horrendous weakness in the nation’s housing markets and for residential construction showing substantial declines on a year-over-year basis to single family permits both nationally and across every region.Single family housing permits, the reports most leading of indicators, again suggests extensive weakness in future construction activity dropping 24.0% nationally as compared to July 2006.
Moreover, every region showed high double digit declines to permits with the West declining 20.4%, the South declining 27.8%, the Midwest declining 22.3% and the Northeast declining 11.3%.
Keep in mind that these declines are coming on the back of last year’s record declines.
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 20%-30% should provide a solid indication that they are by no means stabilizing.
Remember that permits, starts, and competitions are not simply independent measures but are, in fact, three logically related and dependent measures.In the process of a building project, first you get the “permit”, next you “start” building, and finally you “complete” the project.
For this reason, one must adjust expectations prior to reading a newly released Census Department report to account for the true nature of the data published simultaneously each month.
As in past months, I have “smoothed” (see last post for full details on smoothing process) out the unadjusted data and aligned the three data series (i.e. moved starts ahead a month and completions ahead six months) to make more obvious their trend.
Here are the statistics outlined in today’s report:Housing Permits
Nationally
- Single family housing permits down 1.6% from June, down 24.0% as compared to July 2006
- For the Northeast, single family housing down 1.1% from June, down 11.3% as compared to July 2006.
- For the West, single family housing permits down 1.6% from June, down 20.4% as compared to July 2006.
- For the Midwest, single family housing permits down 7.5% from June, down 22.3% as compared to July 2006.
- For the South, single family housing permits up 0.4% from June, down 27.8% compared to July 2006.
Nationally
- Single family housing starts down 7.3% from June, down 25.4% as compared to July 2006.
- For the Northeast, single family housing starts down 12.0% from June, down 7.8% as compared to July 2006.
- For the West, single family housing starts down 6.4 from June, down 21.2% as compared to July 2006.
- For the Midwest, single family housing starts down 9.2% from June, down 25.8% as compared to July 2006.
- For the South, single family housing starts down 6.2% from June, down 29.5% as compared to July 2006.
Nationally
- Single family housing completions down 4.0% from June, down 27.7% as compared to July 2006.
- For the Northeast, single family housing completions down 29.3% from June, down 38.3% as compared to July 2006.
- For the West, single family housing completions up 5.6% from June, down 19.4% as compared to July 2006.
- For the Midwest, single family housing completions down 14.7% from June, down 44.9% as compared to July 2006.
- For the South, single family housing completions down 0.5% from June, down 23.5% as compared to July 2006.
