Housing Starts and Permits Improve But Not Enough

Mish

Starts and permits improve but remain below pre-covid levels and levels of a year ago.

Here are the key numbers from this mornings Residential New Construction report.

Building Permits 

Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,241,000. This is 2.1 percent above the revised May rate of 1,216,000, but is 2.5 percent below the June 2019 rate of 1,273,000. 

Single-family authorizations in June were at a rate of 834,000; this is 11.8 percent  above the revised May figure of 746,000. Authorizations of units in buildings with five units or more were at a rate of 368,000 in June. 

Housing Starts 

Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,186,000. This is 17.3 percent above the revised May estimate of 1,011,000, but is 4.0 percent below the June 2019 rate of 1,235,000. 

Single-family housing starts in June were at a rate of 831,000; this is 17.2 percent above the revised May figure of 709,000. The June rate for units in buildings with five units or more was 350,000. 

Housing Completions 

Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,225,000. This is 4.3 percent above the revised May estimate of 1,174,000 and is 5.1 percent above the June 2019 rate of 1,166,000. 

Single-family housing completions in June were at a rate of 910,000; this is 9.6 percent above the revised May rate of 830,000. The June rate for units in buildings with five units or more was 311,000. 

Housing Starts and Permits 1965-Present 

Housing Starts and Permits 1965-Present for June 2020

The above chart puts a needed perspective on how Covid-19 slammed new housing construction. 

Yet, even before Covid, housing housing starts were at 1970's levels. 

Related Articles 

There are still 32 million people on some for of unemployment insurance. It is safe to say they will not be in the housing market.

Also note that millennials have abandoned plans to buy a home.

For discussion, please click on the above links.

Mish

Comments (25)
No. 1-12
Tony Bennett
Tony Bennett

June will be high water mark for a lot of economic numbers (for this cycle).

MiTurn
MiTurn

It would be interesting to see where the hot spots are and where things have really tanked. Seems bi-polar. A lot of anecdotal evidence for both ends of the spectrum.

KansasDog
KansasDog

I was hoping a crash would slow down the slaughter of my rural area but I didn't factor in riots and pandemics.

IA Hawkeye in SoCal
IA Hawkeye in SoCal

Interest rates falling and SoCal home prices still rising. Expect 2% 30 year mortgages within 24 months.

We lopped off 1/3 of the economy, yet starts only fell 4%? A majority of those affected by the horrendous unemployment, were probably not homeowner material in the first place.

Anda
Anda

Skipping over to Europe an interesting chart from ElPais. All numbers are dubious as always, here gdp is imf (spain revised down recently by them which is not shown on data sites), and fatalities per million is government / local stats. Clearly different economies will be affected differently by similar circumstance, but all the same this chart gives some idea. Top right are countries whose economies and population were better protected so far, bottom left the reverse. The US would be in the bottom right hand square, about where the word "No" is, protects economy but not so much the population. Just for comparisons, and parts of Spain are going back into semi-official lockdown, Cataluña and Barcelona as well as Lérida.

KidHorn
KidHorn

I wouldn't rule out unemployed people buying homes. Some will probably go into the house flipping business and the banks, backed by the FED, will be willing and able to loan them whatever they want.

anoop
anoop

observe the data, don't judge it.

shamrock
shamrock

It defies all common sense given the economic calamity but I haven't seen a seller's market like this summer since the boom years of 15 years ago. Houses are selling in a matter of days and over asking. A house down the street was purchased for $550,000 by an investor, completely renovated, asking price $899,000, sale price $1,025,000.

DFWRealEstate
DFWRealEstate

June numbers were an expected improvement, but builders are just playing catch-up at this point. You can see this from the unadjusted single-family data. Permits were up, starts slightly down, completions down a bit more compared to last year.
The problem for the housing market, and certainly new home builders, is bringing enough affordable housing supply to the market to sustain sales volumes. Not likely to happen with the Fed inflating asset prices. With affordable inventory already drained this summer, a slowdown in the second half is certainly a possibility. Without additional stimulus, it's an absolute certainty.
It's a catch-22 for the Fed. They're throwing massive stimulus into the markets to bail out the "system", but in the process they just keep adding to the debt and distortions because the liquidity is obviously not trickling down into the real economy as it should. For housing that means record high prices per square foot here in the Dallas-Fort Worth market (new construction and resale), yet somehow the Federal Reserve mouthpieces can't find inflation staring them right in the face.

tokidoki
tokidoki

My guess is this has something to do with the stock market.

Six000mileyear
Six000mileyear

A couple macro conditions in the chart caught my attention. When the housing bubble burst; completions were greater than new starts and permits. One would expect those two events to reflect a falling demand. In the housing market recovery of the past 10+ years; new permits and starts have outpaced completions. This immediately tells me supply is greater than demand, counters NAR's argument that housing supply is too low, and suggests there was never really a shortage of construction laborers.


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