The Census Bureau's New Residential Construction report shows a rebound of new housing activity in March.

Building Permits: Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,354,000. This is 2.5 percent above the revised February rate of 1,321,000 and is 7.5 percent above the March 2017 rate of 1,260,000. Single-family authorizations in March were at a rate of 840,000; this is 5.5 percent below the revised February figure of 889,000. Authorizations of units in buildings with five units or more were at a rate of 473,000 in March.

Housing Starts: Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,319,000. This is 1.9 percent above the revised February estimate of 1,295,000 and is 10.9 percent above the March 2017 rate of 1,189,000. Single-family housing starts in March were at a rate of 867,000; this is 3.7 percent below the revised February figure of 900,000. The March rate for units in buildings with five units or more was 439,000.

Housing Completions: Privately-owned housing completions in March were at a seasonally adjusted annual rate of 1,217,000. This is 5.1 percent below the revised February estimate of 1,282,000, but is 1.9 percent above the March 2017 rate of 1,194,000. Single-family housing completions in March were at a rate of 840,000; this is 4.7 percent below the revised February rate of 881,000. The March rate for units in buildings with five units or more was 371,000.

Housing Starts by Region and Type

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Spring Rebound

Mortgage News Daily reports Housing Starts, Permits Stage Spring Recovery.

Single-family starts slipped 3.7 percent from the previous month to a rate of 867,000. The February estimate for single family units was revised down slightly, from 902,000 units to 900,000, leaving the year-over-year rate of starts higher by 5.2 percent. Multi-family starts increased by 16.1 percent to 439,000 units and were 23.7 percent higher than a year earlier.

On a non-adjusted basis construction was begun on 106,900 units in March, up from 90,200 in February. Single family starts numbered 71,500 and 62,500 respectively for the two periods.

The report's lone weak spot was housing completions which lagged those in February by 5.1 percent. Houses were brought on line at a seasonally adjusted rate of 1,217,000 units compared to 1,282,000 in February. The latter number was revised down from the earlier report of 1,319,000 units. Completions remain higher than a year earlier by 1.9 percent.

One Strong Spot

The idea there was only one weak spot in the report is rather amusing.

Actually, there was only one strong aspect: multi-family.

Rose-Colored Glasses

Econday was also overly optimistic.

The residential construction business had a very strong March: housing starts easily topped Econoday's high estimate at a 1.319 million annualized rate while permits came in just shy of the top estimate at a very strong 1.354 million.

Multi-family units are the standout in the March report. Starts for this group rose 14.4 percent in the month to a 452,000 rate with permits 19.0 percent higher at 514,000. Single-family units are soft with starts down 3.7 percent to an 867,000 rate and with permits down 5.5 percent to an 840,000 rate in a result offset by a large upward revision to February.

One clear negative, perhaps tied to weather, is a slowing in completions which fell 5.1 percent to 1.217 million. This is not good news for a housing market starved of supply.

Reality

  • The continued weakness in single-family isn't good.
  • Building apartments does not lead to family formation. Nor does it lend itself to landscaping and other such activities, or remodeling down the road.
  • Finally, completions, down 5.1 percent are a definite negative for first quarter GDP.

Mike "Mish" Shedlock