The New Residential Construction report looks like a mixed bag, but the single-family numbers are a disaster.

Building Permits: Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,294,000. This is 0.3 percent above the revised April rate of 1,290,000, but is 0.5 percent below the May 2018 rate of 1,301,000. Single‐family authorizations in May were at a rate of 815,000; this is 3.7 percent above the revised April figure of 786,000. Authorizations of units in buildings with five units or more were at a rate of 442,000 in May.

Housing Starts: Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,269,000. This is 0.9 percent below the revised April estimate of 1,281,000 and is 4.7 percent below the May 2018 rate of 1,332,000. Single‐family housing starts in May were at a rate of 820,000; this is 6.4 percent below the revised April figure of 876,000. The May rate for units in buildings with five units or more was 436,000.

Housing Completions: Privately‐owned housing completions in May were at a seasonally adjusted annual rate of 1,213,000. This is 9.5 percent below the revised April estimate of 1,340,000 and is 2.8 percent below the May 2018 rate of 1,248,000. Single‐family housing completions in May were at a rate of 890,000; this is 5.0 percent below the revised April rate of 937,000. The May rate for units in buildings with five units or more was 319,000.

Beauty In Eyes of Beholder

Mortgage News Daily claims Construction Numbers Better Than Percentages Indicate.

The claim is based on permits, but permits don't translate into starts unless there are buyers or builders decide to build on spec.

Starts did beat consensus estimates but single-family missed by a mile.

Single-Family Starts Year-Over-Year

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Single Family vs Multi-Family

  • Single-family starts declined by 6.4 percent from the revised April level of 876,000 (originally 854,000) to 820,000 units and by 12.5 percent compared to May 2018.
  • Multifamily starts increased by 13.8 percent to 436,000, putting them ahead of the rate a year earlier by exactly the same percentage.

That is not a good trade-off.

Family formation has stalled. Homes are not affordable.

As a point of clarification, MND used seasonally-adjusted year-over-year comparisons to arrive at -12.5%. The above chart shows -11.7%. One normally uses unadjusted numbers for year-over-year comparisons.

It's tough to spin this as positive news, but Mortgage News Daily managed.

Mike "Mish" Shedlock

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