Subtitle: Government Sponsored Bounce Be Gone!Today’s New Residential Construction Report was another blow to the “Green Shoots” crowd with both single family permits and starts declining significantly on a month-to-month and year-over-year basis in most regions.
This continues to 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 an induced bounce brought on by the government homeborrower tax handout which worked to fuel unusually strong seasonal activity (… 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 476K single family units (SAAR), the level of national housing starts still remains substantially below that seen in October 2008.
Another important factor in today’s results was the significant declines to multi-unit structures with permits for structures with at least 5 units dropping 18.3% month-to-month and 62.4% year-over-year while starts dropped 33.3% month-to-month and 78.1% year-over-year.
Permits for multi-unit structures with less than 5 units declined 15.8% month-to-month and 51.5% year-over-year while start appears to have dropped so substantially that the Census Bureau held back the seasonally adjusted results citing that “[the data] Does not meet publication standards because tests for identifiable and stable seasonality do not meet reliability standards.”… though seasonally unadjusted there was a 50% month-to-month and 60% year-over-year decline.
Single family housing permits, the most leading of indicators, again suggests declining future construction activity dropping 4.0% nationally as compared to October 2008 and an astonishing 74.11% since the peak in January 2005.
The one slight “green shoot” in today’s data, however, was that although most regions showed declines to permits with the Northeast declining 4.1%, the Midwest declining 12.2%, the South declining 3.7%,... the West actually registering the first year-over-year gain in permits in 46 consecutive months, a slight move up of 2.13%.
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 4.0% as compared to October 2008.
- For the Northeast, single family housing down 4.1% as compared to October 2008.
- For the Midwest, single family housing permits down 12.2% as compared to October 2008.
- For the South, single family housing permits down 3.7% compared to October 2008.
- For the West, single family housing permits up 2.13% as compared to October 2008.
Nationally
- Single family housing starts down 10.9% as compared to October 2008.
- For the Northeast, single family housing starts down 17.5% as compared to October 2008.
- For the Midwest, single family housing starts down 16.8% as compared to October 2008.
- For the South, single family housing starts down 4.9% as compared to October 2008.
- For the West, single family housing starts down 16.5% as compared to October 2008.
Nationally
- Single family housing completions down 30.2% as compared to October 2008.
- For the Northeast, single family housing completions up 1.7% as compared to October 2008.
- For the Midwest, single family housing completions down 41.0% as compared to October 2008.
- For the South, single family housing completions down 32.9% as compared to October 2008.
- For the West, single family housing completions down 26.6% as compared to October 2008.
