Housing Starts and Building Permits: One Step Forward, One Step Back

The U.S. Census Bureau and the Department of Housing and Urban Development have released New Residential Construction statistics for July 2010.</p

Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5 unit and above housing data, single family housing is by far the most important as it accounts for 70-80% of total home building.

Building Permits data provides an estimate on the number of homes planning on being built. This indicator basically tracks how much future construction activity we should expect to take place in the future. This data is a part of Conference Board's Index of Leading Economic Indicators.</p

BUILDING PERMITS
Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 565,000. This is 3.1 percent below the revised June rate of 583,000 and is 3.7 percent below the July 2009 estimate of 587,000.</p

Single-family authorizations in July were at a rate of 416,000; this is 1.2 percent below the revised June figure of 421,000. Authorizations of units in buildings with five units or more were at a rate of 129,000 in July.</p

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HOUSING STARTS
Privately-owned housing starts in July were at a seasonally adjusted annual rate of 546,000. This is 1.7 percent above the revised June estimate of 537,000, but is 7.0 percent below the July 2009 rate of 587,000.</p

Single-family housing starts in July were at a rate of 432,000; this is 4.2 percent below the revised June figure of 451,000. The July rate for units in buildings with five units or more was 95,000.</p

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HOUSING COMPLETIONS
Privately-owned housing completions in July were at a seasonally adjusted annual rate of 587,000. This is 32.8 percent below the revised June estimate of 874,000 and is 25.4 percent below the July 2009 rate of 787,000.</p

Single-family housing completions in July were at a rate of 490,000; this is 27.5 percent below the revised June rate of 676,000. The July rate for units in buildings with five units or more was 91,000.</p

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The table below recaps the data and provides a regional breakdown…</p

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In terms of Housing Starts, single-family starts accounted for all weakness as multi-family starts improved by 28,000 annualized units in July (after a 43,000 unit dip in June). The South was the best performerrn in June but the worst performer in July. The Northeast was the #1 loserrn in June but led the pack in July. The Mid-West rebounded from a read ofrn -6.9 percent in June to +10.7percent in July while the West was unchanged on a month over month basis.</p

In terms of Building Permits, both single-family and multi-family permits fell but multi-family was the largest source of weakness with a 13,000 unit decline. The Northeast saw the biggest uptick in Building Permits in June but gave back nearly all those gains in July. Permit activity in the South gained back the 3.1 percent decline seen in June plus more.  Permit issuance in the Mid-West continues to fade while the West lost  half of the improvements recordedrn in June. </p

Plain and Simple: One step forward, one step back = STAGNATION. Both permits and starts are hovering near record low levels of activity.</prn

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