Today’s New Residential Construction Report continues to firmly demonstrate the intensity and completeness of the washout conditions that now exist in the nation’s housing markets particularly for new residential construction showing tremendous declines on both a peak and year-over-year basis to single family permits both nationally and across every region.Although this report has become a principle focus for many in the “green shoots” camp, today’s results makes clear that attention is rooted more in wishful thinking than reality.
While it is true that BOTH housing permits and starts have shown now three consecutive months of increased activity, its import to consider how substantial the decline to all building activity was between September 2008 to January 2009.
Even after the sequential monthly rises we are still only slightly off the low set in January and February.
Now with the particularly important early spring activity is complete (yes the data is seasonally adjusted but algorithmic manipulation of cyclical data is NOT a perfect science as witnessed by many of the charts in this post) the coming months data will likely reveal a continuation of the decline.
The combination of a high standing inventory of new homes (10.1 months of supply), elevated new home completion level and increasing foreclosures activity will work to push down the new home market for the foreseeable future.
Single family housing permits, the most leading of indicators, again suggests extensive weakness in future construction activity dropping 35.51% nationally as compared to April 2008 and an astonishing 75.18% since the peak in January 2005.
Moreover, every region showed significant double digit declines to permits with the Northeast declining 31.15%, the Midwest declining 31.4%, the South declining 36.4%, and the West declining 36.8% on a year-over-year basis.
Keep in mind that these declines are coming on the back of the last three years of 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 on a year-over-year basis as well as compared to the peak year of 2004.
Declines to single family permits have contracted measurably in terms of monthly YOY declines, and the fact that we are now seeing declines of roughly 30%-50% on the back of 2006, 2007 and 2008 declines should provide a an unequivocal indication that the housing markets are by no means stabilizing.
Here are the seasonally adjusted statistics outlined in today’s report:Housing Permits
Nationally
- Single family housing permits down 35.1% as compared to May 2008.
- For the Northeast, single family housing down 31.1% as compared to May 2008.
- For the Midwest, single family housing permits down 31.4% as compared to May 2008.
- For the South, single family housing permits down 36.4% compared to May 2008.
- For the West, single family housing permits down 36.8% as compared to May 2008.
Nationally
- Single family housing starts down 40.9% as compared to May 2008.
- For the Northeast, single family housing starts down 47.8% as compared to May 2008.
- For the Midwest, single family housing starts down 38.1% as compared to May 2008.
- For the South, single family housing starts down 42.2% as compared to May 2008.
- For the West, single family housing starts down 36.2% as compared to May 2008.
Nationally
- Single family housing completions down 43.4% as compared to May 2008.
- For the Northeast, single family housing completions down 34.9% as compared to May 2008.
- For the Midwest, single family housing completions down 44.0% as compared to May 2008.
- For the South, single family housing completions down 42.2% as compared to May 2008.
- For the West, single family housing completions down 50.0% as compared to May 2008.
