Subtitle: Green Shoots Wilt… Soon to Die!Today’s New Residential Construction Report was show-stopper for the “Green Shoots” crowd with both single family permits and starts declining notably from July.
This may indicate that the bounce seen in new construction activity that occurred between March and July was NOT the start of an “organic” V-shaped housing recovery but rather a combination of the demand inducing government homebuyer tax handout and strong seasonal activity (unusually strong thus thwarting seasonal adjustment) from pent-up demand sidelined by the epic financial panic at the end of 2008.
It’s important to consider that at 479K single family units (SAAR), the level of national housing starts still remains substantially below that seen in October 2008.
Single family housing permits, the most leading of indicators, again suggests sluggish future construction activity dropping 15.69% nationally as compared to August 2008 and an astonishing 73.08% since the peak in January 2005.
Moreover, every region showed significant double digit declines to permits with the Northeast declining 26.7%, the Midwest declining 10.1%, the South declining 13.8%, and the West declining 18.8% 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.
Here are the seasonally adjusted statistics outlined in today’s report:Housing Permits
Nationally
- Single family housing permits down 15.7% as compared to August 2008.
- For the Northeast, single family housing down 26.7% as compared to August 2008.
- For the Midwest, single family housing permits down 10.1% as compared to August 2008.
- For the South, single family housing permits down 13.8% compared to August 2008.
- For the West, single family housing permits down 18.8% as compared to August 2008.
Nationally
- Single family housing starts down 21.7% as compared to August 2008.
- For the Northeast, single family housing starts down 25.4% as compared to August 2008.
- For the Midwest, single family housing starts down 20.4% as compared to August 2008.
- For the South, single family housing starts down 23.0% as compared to August 2008.
- For the West, single family housing starts down 18.4% as compared to August 2008.
Nationally
- Single family housing completions down 31.6% as compared to August 2008.
- For the Northeast, single family housing completions down 44.6% as compared to August 2008.
- For the Midwest, single family housing completions down 27.3% as compared to August 2008.
- For the South, single family housing completions down 31.4% as compared to August 2008.
- For the West, single family housing completions down 30.2% as compared to August 2008.
