Tag Archives: multifamily housing starts

Housing Starts, Permits Tumble In April

Having bounced notably in March, both Housing Starts and Building Permits in April tumbled (-3.7% MoM and -1.78% MoM respectively).

  • March building permits growth was upwardly revised from +2.5% MoM to +4.1% MoM
  • March housing starts growth was upwardly revised from +1.9% MoM to +3.6% MoM

Starts dropped 3.7% MoM in April – far worse than the 0.7% drop expected but while permits also dropped 1.8% MoM, this was slightly better than the expected 2.1% drop…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16_5-34-03.jpg?itok=8B4H7_68

For some context, Starts and Permits remain over 40% below their 2005/6 peaks…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16_5-32-15.jpg?itok=i-6Djf8L

Housing Permits breakdown…

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16.png?itok=OoA8ZcQy

The driver of the tumble in housing starts is a 11.3% plunge in multi-family.. (single-family 893k vs 894k prior and multi-family 374k from 428k)

https://www.zerohedge.com/sites/default/files/inline-images/2018-05-16%20%281%29.png?itok=wf60mKdp

Three of four regions posted declines in starts, led by a 16.3 percent decrease in the Midwest and a 12 percent drop in the West.

Construction climbed 6.4 percent in the South, reflecting the fastest pace of single-family starts since July 2007.

As always, weather is blamed for any downside.

Source: ZeroHedge

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Housing Starts, Permits Surge On Spike In Rental Units

Another day, another confirmation that the US economy is heating up just a little more than most expected.

https://s.hdnux.com/photos/46/01/60/9968677/5/920x920.jpg

With Wall Street expecting housing starts and permits of 1.234MM and 1.300MM, respectively, moments ago the US Census reported number that blew away expectations, with starts printing at 1.326MM in January, a 9.7% increase relative to the 3.5% expected, while permits jumped by 7.4% from 1.300MM to 1.396MM, on expectations of an unchanged print.

What is notable in today’s number is that single-family units were largely in line, declining for Permits from 881K to 866K, while single-family Starts rose from 846K to 877K, still well below November’s 946K.

So where did the bounce come from? The answer: multi-family, or rental units, which surged for Permits from 382K to 479K, while multi-family Starts surged from 360K to 431K, the highest number since December 2016.

Here is the visual breakdown, first Starts:

https://www.zerohedge.com/sites/default/files/inline-images/housing%20starts%20jan%202018.jpg?itok=lb-HjIWq

then Permits:

https://www.zerohedge.com/sites/default/files/inline-images/housing%20permits%20jan%202018.jpg?itok=IO5Vk_Jp

While it is very early to infer causality, the jump in rental unit construction could potentially add a modest disinflationary pressure to rents, which in recent months have seen declines across some of America’s largest MSAs. Whether or not this impacts Fed policy is too early to determine.

Source: ZeroHedge

Housing Starts Unexpectedly Sink, Multi-Family in Huge 34% Retreat Year-Over-Year

Construction spending for the second quarter is off to a slow start as judged by housing starts. The Econoday consensus was for a 1% rise. Instead, starts declined nearly 5% from the initial June report, now revised lower.

Construction Indicators Slide

Mortgage News Daily reports Construction Indicators Slide, Housing Starts Suffer.

After posting unexpectedly high numbers in June, all three residential construction indicators lost ground in July, and one, housing starts, is now running below its year-ago rate. While the softening is primarily in the multi-family sector, starts have declined in four of the last five months and permits in three of the last four.

The U.S. Census Bureau and the Department of Housing and Urban Development said privately owned housing starts were at a seasonally adjusted annual rate of 1,155,000 units, a 4.8 percent decline from June’s estimate of 1,213,000, which was revised down from 1,215,000. July starts were down 5.6 percent from the 1,223,000-unit annual rate in July 2016.

Starts failed to meet even the lowest predictions of analysts polled by Econoday. Their estimates ranged from 1.174 million to 1.250 million with a consensus of 1.225 million.

Single family starts were at a rate of 856,000, down 0.5 percent from a month earlier but 10.9 percent higher than the same month in 2016. Multifamily starts plunged 17.1 percent to 287,000 units and are down 35.2 percent year-over-year.

The performance of permits was like that of housing starts, down 4.1 percent to a seasonally adjusted annual rate of 1,223,000 units. Permits however held on to an annual increase of 4.1 percent. The June permitting rate was revised higher, from 1,254,000 to 1,275,000.

Analysts had expected permits to decline, with a consensus estimate of 1.246 units. Here again the drop was outside the low end of the range of 1.230 to 1.270 million units.

Authorizations for single-family homes were at a seasonally adjusted rate of 811,000, unchanged from June and 13.0 percent higher on an annual basis. Multi-family permits were 12.1 percent lower than the previous month at 377,000. This was down 11.7 percent year-over-year.

Permits:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19c1.png?w=1249&h=700

Starts:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19b1.png?w=1258&h=700

Units Under Construction:

https://mishgea.files.wordpress.com/2017/08/residential-construction-2017-08-19a.png?w=1275&h=700

Second-Half Outlook:

Econoday came up with this overall assessment: “Putting all the pieces together: starts are down 5.6 year-on-year in weakness offset by permits which are up 4.1 percent. Permits are the forward looking indication in this report and today’s news, despite July weakness and general volatility in the data, is good. The housing sector, even with starts being soft, looks to be a contributor to the second-half economy.”

While it’s true that it takes a permit to begin construction, a permit does not guarantee construction will start anytime soon. At economic turns, they won’t.

Even assuming those permits turn into starts, the data still does not look to be a contributor to the second-half economy.

The number of permits and starts for multifamily explains what you need to know. 5-unit or more buildings will add more to construction spending numbers than 1-unit buildings. Permits and starts for multifamily structures plunged.

By Mike “Mish” Shedlock