Today’s New Residential Construction Report firmly indicates a new leg down in the decline to the nation’s housing markets and for residential construction showing substantial declines on a year-over-year and month-to-month 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 28.6% nationally as compared to September 2006.
Moreover, every region showed high double digit declines to permits with the West declining 34.6%, the South declining 30.4%, the Midwest declining 19.3% and the Northeast declining 16.0%.
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 completions 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” 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 28.6% as compared to September 2006
- For the Northeast, single family housing down 16.0% as compared to September 2006.
- For the West, single family housing permits down 34.6% as compared to September 2006.
- For the Midwest, single family housing permits down 19.3% as compared to September 2006.
- For the South, single family housing permits down 30.4% compared to September 2006.
Nationally
- Single family housing starts down 30.8% as compared to September 2006.
- For the Northeast, single family housing starts down 20.0% as compared to September 2006.
- For the West, single family housing starts down 32.2% as compared to September 2006.
- For the Midwest, single family housing starts down 28.8% as compared to September 2006.
- For the South, single family housing starts down 32.4% as compared to September 2006.
Nationally
- Single family housing completions down 30.8% as compared to September 2006.
- For the Northeast, single family housing completions down 20.0% as compared to September 2006.
- For the West, single family housing completions down 32.2% as compared to September 2006.
- For the Midwest, single family housing completions down 28.0% as compared to September 2006.
- For the South, single family housing completions down 32.4% as compared to September 2006.
