Housing Starts Jump More Than Expected: Economy Overheating?

Mish

Housing starts and permits were overall positive, but negative revisions make the increases less than meets the eye.

The Census Bureau's monthly New Residential Construction Report shows a second strong month for housing.

Housing Starts

  • Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,297,000. This is 3.3% above the revised October estimate of 1,256,000 and is 12.9% above the November 2016 rate of 1,149,000.
  • Single-family housing starts in November were at a rate of 930,000; this is 5.3% above the revised October figure of 883,000.
  • The November rate for units in buildings with five units or more was 359,000.
  • Starts for October were revised lower from 1.290,000 units to 1,256,000 units.

Housing Permits

  • Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,298,000. This is 1.4% below the revised October rate of 1,316,000, but is 3.4% above the November 2016 rate of 1,255,000.
  • Single-family authorizations in November were at a rate of 862,000; this is 1.4% above the revised October figure of 850,000. Authorizations of units in buildings with five units or more were at a rate of 395,000 in November.
  • Permits for October were revised up from 1,297,000 units to 1,316,000 units.

Housing Completions

  • Privately-owned housing completions in November were at a seasonally adjusted annual rate of 1,116,000. This is 6.1% below the revised October estimate of 1,189,000 and is 7.2% below the November 2016 rate of 1,203,000.
  • Single-family housing completions in November were at a rate of 752,000; this is 4.6% below the revised October rate of 788,000.
  • The November rate for units in buildings with five units or more was 353,000.

By Region

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By region, the Northeast and Midwest were lackluster. The far more important South and West were humming. Both areas has the highest number of starts in at least a year.

These numbers are likely to up GDP estimates and start talk of the economy overheating.

Overheating?

I don't know, but the next step after overheating tends to be collapse.

Mike "Mish" Shedlock

Comments (4)
No. 1-4
KidHorn
KidHorn

The south numbers are not surprising after the hurricanes. Not sure what's driving the West.

Stuki
Stuki

Structural housing demand in the West is, at it’s very base, underpinned by Mormon expansion. Not only are Mormons substantially more fertile than the population at large, but they also tend to form households, and buy houses, at a higher rate, starting at a younger age. As their share of the Western population increases, their influence on population wide statistics will continue to increase.

KidHorn
KidHorn

Stuki, That's nothing new and wouldn't explain a big jump over last year.

ReadyKilowatt
ReadyKilowatt

People are retiring from California and moving to low tax states like Colorado. Good for me since it is causing bidding wars for real estate, but also bad because if I want to take a job in the overheated front range (Denver and the I 25 corridor) I’ll be priced out of the market. So if I stay where I am I get a great ROI on my house, but will only get the benefit if I sell and move away.