Subtitle: Mark Four For Green Shoots… But...Today’s New Residential Construction Report adds a fourth consecutive feather in the cap of the “Green Shoot” camp and further will likely continue to promote a sense that our massive economic decline is drawing to a close.
It’s important to consider that at 470K single family units (SAAR), the level of national housing starts still remains substantially below that seen in October 2008.
Further, it’s important to note that the more leading “permits” series were flat in all regions except the south which jumped 11% and providing the majority of lift for the headline permits number.
The combination of a high standing inventory of new homes (10.2 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 sluggish future construction activity dropping 28.93% nationally as compared to June 2008 and an astonishing 74.45% since the peak in January 2005.
Moreover, every region showed significant double digit declines to permits with the Northeast declining 26.8%, the Midwest declining 27.3%, the South declining 26.7%, and the West declining 36.3% 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.
Here are the seasonally adjusted statistics outlined in today’s report:Housing Permits
Nationally
- Single family housing permits down 28.9% as compared to June 2008.
- For the Northeast, single family housing down 26.8% as compared to June 2008.
- For the Midwest, single family housing permits down 27.3% as compared to June 2008.
- For the South, single family housing permits down 26.7% compared to June 2008.
- For the West, single family housing permits down 36.3% as compared to June 2008.
Nationally
- Single family housing starts down 28.2% as compared to June 2008.
- For the Northeast, single family housing starts down 27.0% as compared to June 2008.
- For the Midwest, single family housing starts down 18.0% as compared to June 2008.
- For the South, single family housing starts down 34.0% as compared to June 2008.
- For the West, single family housing starts down 22.6% as compared to June 2008.
Nationally
- Single family housing completions down 36.1% as compared to June 2008.
- For the Northeast, single family housing completions down 29.5% as compared to June 2008.
- For the Midwest, single family housing completions down 47.9% as compared to June 2008.
- For the South, single family housing completions down 33.5% as compared to June 2008.
- For the West, single family housing completions down 33.5% as compared to June 2008.
