Housing Starts Rise 2.2 Percent in April But From Steep Negative Revisions to March

Today the Census Department released the New Residential Construction Report for April 2023.

Revision Notice

With this release, unadjusted estimates of housing units authorized by building permits for January through December 2022 have been revised. Also, seasonally adjusted estimates of housing units authorized by building permits have been revised back to January 2017, and seasonally adjusted estimates of housing units authorized but not started, started, under construction, and completed have been revised back to January 2018. All revised estimates are available on our website. 

Building Permits 

• Privately‐owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,416,000. This is 1.5 percent below the revised March rate of 1,437,000 and is 21.1 percent below the April 2022 rate of 1,795,000.
• Single‐family authorizations in April were at a rate of 855,000; this is 3.1 percent above the revised March figure of 829,000. 
• Authorizations of units in buildings with five units or more were at a rate of 502,000 in April. 

Housing Starts

• Privately‐owned housing starts in April were at a seasonally adjusted annual rate of 1,401,000. This is 2.2 percent (±11.9 percent) above the revised March estimate of 1,371,000, but is 22.3 percent (±8.7 percent) below the April 2022 rate of 1,803,000.
•  Single‐family housing starts in April were at a rate of 846,000; this is 1.6 percent (±12.3 percent) above the revised March figure of 833,000. 
• The April rate for units in buildings with five units or more was 542,000. 

Housing Completions 

• Privately‐owned housing completions in April were at a seasonally adjusted annual rate of 1,375,000. This is 10.4 percent (±9.9 percent) below the revised March estimate of 1,534,000, but is 1.0 percent (±16.4 percent) above the April 2022 rate of 1,361,000. 
• Single‐family housing completions in April were at a rate of 971,000; this is 6.5 percent (±11.0 percent) below the revised March rate of 1,039,000. 
• The April rate for units in buildings with five units or more was 400,000. 

Note the margins of error in these stats. And they are needed.

For example the Census Department revised starts in March from 1.420 million to 1.371 million, a negative revision of 3.5 percent. This is how we arrive at a reported rise 2.2 percent in April.

History suggests the April rise will be revised away in May. I did not take a dive into the published revisions all the way back to 2017. 

Housing Starts Single Family vs Multi-Family 

Of the 1.401 million seasonally-adjusted, annualized starts, 846,000 were single-family and 555,000 multi-family. 

The actual number of starts in April was 127,000 not 1.401 million. 

Unadjusted Numbers

Tough Comparisons and Looking Ahead

Housing starts are 22.3 percent below the level of a year ago. This stems form the fact that April of 2022 was the top with 164,000 unadjusted starts.

Next month, the comparison will be much easier. So look for a reported improvement in the year-over-year starts.

Looking Back

Last month, I reported “Housing starts and permits dipped a little lower in March. Starts beat expectations but February revised lower.”

For discussion, please see Housing Starts and Permits Slide in March as Mortgage Rates Head Higher

This post originated at MishTalk.Com

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