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
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
- All Continued Unemployment Claims Top 32 Million Again
- Millennial Renters Abandon Their Plans to Buy a Home
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
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.
“A seller’s market in one place could also mean a buyer’s market somewhere else.”
My guess is this has something to do with the stock market.
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.
“..because the liquidity is obviously not trickling down into the real economy as it should.”
That’s because it shouldn’t. Or, more accurately, it cannot.
The Fed printing Washington’s face on paper pieces, don’t create any new value.
Hence, total wealth remain the same.
Hence, the only way any wealth could possibly “trickle down,” is if it “trickled down” FROM somewhere. Somewhere UP. As in, making those who are UP, less wealthy.
And while Powell himself may well be flat out ignorant and stupid enough to believe that pumping up the asset prices of those UP, somehow makes them less wealthy, there are people at The Fed who aren’t quite that dumb. I would hope…..
Hence, things probably are as they should: Designated slaves toiling, so that Massa can buy more land to add to his plantation. That way, he can preen around patting himself for being a “job creator.” And for being compassionate enough that he lets little nigga children have some breadcrumbs when the T cameras are rolling, while their parents are busy out in the field, working to pay “their” rent.
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.
A seller’s market in one place could also mean a buyer’s market somewhere else.
Who would buy a house in NYC nowadays? Also who would be able to afford two houses? Most Americans can’t even afford one. If they have to sell their first one at a loss, that limits how much they can pay for the new one.
Plenty of people who have a house in NYC and other welfare-heavy free-shit-army bastions, are easily being handed enough loot by The Fed, for them to afford driving around spreading covid and homelessness to more rural areas.
A defining characteristic of limit-case financialized dystopias, is that “most” people don’t “own” anything. Since it has all been stolen from them by the central bank and government, and handed to members of the free shit army.
Hence “most people” aren’t the ones buying houses. Just as “most people” weren’t the ones buying Antebellum cotton plantations. Only a small and dwindling percentage of Fed favored welfare recipients, are still in a position to buy anything of value. The role the rest is assigned, is just to work under a whip to pay for it.
Where, Shamrock?
observe the data, don’t judge it.
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.
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.
Thanks for sharing Anda, very informative.
I also wonder if the various strains of the virus — as it seems some are more lethal than others — might be a variable here too. We probably won’t know until years down the road.
Appreciated. It is not easy to put this last half year into context, and there are many variables. Some are obvious (like lockdowns) which are clearly in the hands of authorities, others are much more subtle. I think people are judging according to how their governments and society react to the epidemic, which is correct but it doesn’t answer questions like the trade-off between economy and safety which will probably be long disputed. Some countries have made obvious errors, but in other cases some of the circumstance is beyond their control. Spain made and is making obvious errors, but the larger loss of gdp is mainly due to reliance on tourism which would likely have occurred either way. Portugal just quietly closed down and society is more in tune with itself here as well as being a tad more remote than say Madrid, so they avoided the cases but the economic loss is still high . I don’t know what Poland and some scandi countries did right, but I think maybe how society is played a part. In the south people congregate a lot more maybe. Then there is strains as you say, demographic, resistance in population and many many other factors to take into consideration.
I know several countries reasonably well so it helps, but in reality you have to be following each keenly to know the timeline and actions, popular sentiment. I only manage that closely for a few, even for the US I cannot place which states, or how the nation, decided what and when, though those in the US will know this well. Instead I think people just have a broad idea of what is roughly going on in other countries, so it is good to share if only to get some perspective. I’ll keep posting on Spain and europe as events change, some of it is important because it marks future trends. For example now I will post on Spain in whatever topic is closest of Mish’s articles because it is back at just pre-lockdown levels of cases. In texas they are saying no lockdown again if possible, I think Spain might be amongst the first to go back into lockdown, what it decides will be a kind of example.
I’ll add an update on Spain here because the next article isn’t on the epidemic:
Spain 7 day total of new cases has reached the same level that occurred just before the previous several week nationwide lockdown that had started in march
The original center of outbreak was madrid, this time it is mostly cataluña/barcelona but with other regions showing increases also. The Catalan authorities asked people to stay home (from thursday I think), but just yesterday 300 000 vehicles left Barcelona alone for vacation.
So there is a big question mark over who is in charge and what is going on. Maybe more testing has increased the numbers, maybe they are undercounted, no way to know for sure because there are examples of the figure being skewed both ways. That chart is from Matthew Bennett, he had this to say :
“Notwithstanding the difference with the tests—the system now, in theory, detects the cases earlier—during the March rise, we reached 6,000 cases over the previous seven days on March 14, the day that the coronavirus alarm was declared across Spain.”
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.
I was hoping a crash would slow down the slaughter of my rural area but I didn’t factor in riots and pandemics.
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.
I don’t believe things have “tanked” anywhere yet.
Instead, less populated areas are seeing pressure from people from more populated ones. But, so far not paid for by those people selling their current house. But rather by money they have made, and keep making as long as The Fed remains potent, from their current one. Like a proper ponzi.
So it is, at least for now, mainly second home purchasing. It looks huge in lightly populated rural areas with low absolute numbers of units for sale, but it’s just a tiny share of those in urban ones.
Unless The Fed either backs off their Hail Mary aimed at “saving” their clientele at all cost to anyone else; or they simply run out of ability to do so; in the face of collapsing ability to drive in enough rent in populated areas to use as down payment everywhere else, all we’re really seeing is a successful Fed policy of robbing others to now hand two, rather than just one as before, houses to their most favored welfare queens. At the cost of making some more of the robbed homeless and/or indentured and pliantly dependent, as per plan.
Good points.
June will be high water mark for a lot of economic numbers (for this cycle).