Plummeting Housing Starts Data Not as Scary as it Looks

Housingrnstarts ‘plummeted’ in August the Census Bureau said today, falling 14.4 percentrnfrom the revised seasonally adjusted annual rate of 1,117,000 units in July torn956,000 units.  The abrupt change,rnhowever was driven by a 31.5 percent decline in initial construction ofrnbuildings containing 5 or more units. rnSingle-family construction starts were down only 2.4 percent.  Not only that, but last month’s numbers were revised significantly higher.</p

The AugustrnNew Residential Construction report, jointly issued by Census in conjunction withrnthe Department of Housing and Urban Development, revised the July housingrnstarts upward from the original 1,093,000 annual pace reported last month,rnalready a 15.7 percent increase over June. rnDespite the decrease in starts in August, the seasonally adjusted numberrnwas still 8.0 percent higher than the rate of 885,000 units reported in Augustrn2013.  </p

“Bottom line, today’s report was actually pretty good,” said Mortgage News Daily COO Matt Graham, “certainly not as bad as the headline might make it seem.  Multifamily stats have been a volatile contributor to the data.  They made several weaker reports look stronger and now the opposite.  I’d personally focus on the fact that Single Family Starts were only down 2.4 percent from a really stellar reading in July.  In fact July was the 3rd highest month since the crash and today’s report is the 5th highest.”</p

Single-familyrnstarts in August were at an annual rate of 643,000 compared to 659,000 (revisedrnfrom 656,000) in July and was 4.2 percent above the 617,000 starts a yearrnearlier.  Multifamily starts dropped fromrnan annual rate of 444,000 in July to 304,000 in August and were 19.2 percentrnbelow the annual rate the year before.</p

On arnnon-seasonally adjusted basis there were 86,000 housing starts in Augustrncompared to 102,800 in July.  Singlernfamily starts were down from 61,900 to 58,800 and construction of units inrnbuildings with five or more fell from 39,700 units to 26,400.</p

Permitsrnfor new construction were also down, but not as dramatically. Permits werernissued at a seasonally adjusted annual rate of 998,000 in August, compared to arnrevised (from 1,052,000 units) July rate of 1,057,000.  This was a decrease of 5.6 percent.  Permitting was still 5.3 percent above thernrate the previous August of 948,000.</p

Singlernfamily permits were issued in August at a rate of 626,000, down 0.8 percentrnfrom both the revised July number of 631,000 (originally 640,000) and thernprevious August’s identical number. rnMultifamily permits were issued at the rate of 343,000, down 13.4rnpercent from August and 17.5 percent from a year earlier.</p

On arnnon-adjusted basis permits in August totaled 86,800 compared to 97,600 in Julyrnand 87,100 in August 2013.  Fifty-fivernthousand of those permits were for single family construction down from 60,200rnthe previous month and 58,000 the previous year.  Multifamily permits totaled 29,200 comparedrnto 34,600 and 26,700 in the two earlier periods.</p

Housingrncompletions rose for the month to a seasonally adjusted annual rate of 892,000,rnup 3.2 percent from July and 16.9 percent from the August 2013 rate of 763,000.  The number of July completions was revisedrnfrom 841,000 to 864,000.</p

Singlernfamily housing completions in August were at a rate of 591,000, down 8.2rnpercent from July’s revised rate of 644,000 (from 635,000).  There were 292,000 units (annualized) completedrnin multifamily buildings compared to 213,000 in July, an increase of 37.1rnpercent.</p

Housingrnstarts and permits were down from the previous month in every region whilernhousing completions rose in two.  In thernNortheast starts declined by 12.9 percent from July but were up 24.7 percent onrnan annual basis. Permits were off by 11.6 percent month-over-month and 13.0rnpercent year-over-year.  Housingrncompletions rose by 31.6 percent for the month and 46.5 percent for the year.</p

ThernMidwest saw 10.3 percent fewer starts for the month but pulled out a 4.7rnpercent annual gain.  Permits decreasedrnby 12.4 percent from July but were unchanged from a year earlier.  Completions were down by 3.8 percent and 12.8rnpercent in monthly and annual comparisons</p

In thernSouth there was a -10.9 percent month-over-month change but starts were up 7.5rnpercent compared to the previous August. Permitting slipped by a slight 0.6rnpercent from July and was up 17.9 percent from the previous August. Completionsrnwere 0.2 percent lower than in July and 7.4 percent higher than a year earlier.</p

In thernWest the monthly change in housing starts was -24.7 percent with a 3.6 percentrnannual gain.  Permits were down 8.3rnpercent for the month and 5.2 percent compared to a year earlier.  Housing completions were up 5.3 percent fromrnJuly and 22.7 percent from August 2013.</p

At thernend of August there were a total of 794,000 units under construction, 6,000 morernthan in July.  An estimated 350,000 werernsingle-family units.  At the same timernthere were an estimated 108,500 permits that had been issued but for whichrnconstruction had not yet started.  Anrnestimated 56,400 of those units were single family and 50,100 were inrnmulti-unit buildings. More than half of the units under construction (354,000)rnand the lion’s share of backlogged permits (63,000) were located in the South.

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