Completions continue to rise much faster than housing starts. It’s a function of a high interest rates, affordability, and a slowing economy.
Please consider the New Residential Construction Report for June 2024.
Building Permits
- Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,446,000. This is 3.4 percent above the revised May rate of 1,399,000, but is 3.1 percent below the June 2023 rate of 1,493,000.
- Single-family authorizations in June were at a rate of 934,000; this is 2.3 percent below the revised May figure of 956,000.
- Authorizations of units in buildings with five units or more were at a rate of 460,000 in June.
Housing Starts
- Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,353,000. This is 3.0 percent (±10.5 percent) above the revised May estimate of 1,314,000, but is 4.4 percent (±12.7 percent) below the June 2023 rate of 1,415,000.
- Single-family housing starts in June were at a rate of 980,000; this is 2.2 percent (±12.1 percent) below the revised May figure of 1,002,000.
- The June rate for units in buildings with five units or more was 360,000.
Housing Completions
- Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,710,000. This is 10.1 percent (±10.6 percent) above the revised May estimate of 1,553,000 and is 15.5 percent (±12.6 percent) above the June 2023 rate of 1,480,000.
- Single-family housing completions in June were at a rate of 1,037,000; this is 1.8 percent (±10.3 percent) above the revised May rate of 1,019,000.
- The June rate for units in buildings with five units or more was 656,000.
Housing Starts Single Family vs Multi-Family
Housing starts have plunged from the peak, mut more so multi-family than single family.
From their peaks, starts are down 26.0 percent, single-family down 19.8 percent, and multi-family down 40.5 percent.
Single-family starts have stabilized for about a year at roughly 1,000 units at a seasonally-adjusted annualized rate.
Housing Units Under Construction
The number of units under construction has now peaked. This corresponds to a slowing economy and recession but with a long lead time.
The peak in 1986 did not lead to recession and there was no surge to begin with in 2000.
The surge in completions will continue for a long time due to the record number (now near-record) number of units under construction.
I still do not have answer to questions I have been asking for months.
Where Do We Put 8 Million Illegal Immigrants?
On May 23, I asked Where Do We Put 8 Million Illegal Immigrants?
Millions of immigrants keep pouring in. New residential construction has stalled and multi-family construction is in decline. Completions are rising, but is that enough housing?
One of Every Five New York City Hotels is Now a Migrant Shelter
On June 2, I noted One of Every Five New York City Hotels is Now a Migrant Shelter
New York City hotel prices have never been higher. Illegal immigration is part of the reason why. Mayoral graft is another.
Don’t worry, LA has the affordable housing solution starting with “affordable housing units at $600,000 each to house 278 homeless out of 75,518 in the county.
Please note A New High-Rise Building Will House the LA Homeless in $600,000 Units
If the county were to shelter the 75,518 homeless, the cost would be $45,310,800,000. That’s $45.3 billion, excluding free property taxes, case workers, maintenance, utilities, insurance, food, police, clothes, doormen, or medical care.
And it would not stop there. Every homeless person in the state would move their tent to LA to participate.
This dear woke fans is what’s known as “affordable housing”.
Clearly, the proper solution is to do the same thing for 8 million illegal migrants. After all, free food, free clothes, and free shelter is a right.
Key Question
Returning to reality, the key issue is whether completions will finally easy rent increases.
I think that started last month. But it will be spotty by location. Prices in places like Austin that have seen a massive surge in construction will be more impacted than cities with limited construction.
Rent is sticky. But a slowing of rent prices will help the CPI.
For a discussion of rent please see CPI Declines in June, Rent Finally Moderates, Food Away From Home Is a Problem
The string of 33 consecutive months of rent rising 0.4 percent or more is finally broken.
The easing will only occur in three primary cases/reasons: 1) Rental Agreements end in a big way. 2) Evictions. 3) RENEGOTIATION’S.
I own apartment buildings and I have over 200 Tenants demanding decreases and of course we will bend. WE HAVE to do it as we are hearing from our Apartment managers that people are REALLY beginning to complain.
During Covid, we had over 62% of our tenants, all younger folks, who took full advantage of the Rent Mitigation laws, which was CRIMINAL action from our Government. Two of my closest friends lost buildings at the time.
The Good times are coming to a close and we will be dumping 3 or our 5 largest properties to foreign interests (Chinese buyers).
Goog article here!
You left out the most important reason. FHFA conforming loan limits. The GSEs can’t securitize loans above that limit, and 88% of all securitized loans are GSEs, because of the implicit guarantees on the loans. Cut the conforming loan limits in half, and prices will drop, since the entire mortage market pricing (aka the housing market) is effectively set by those price limits.
SPY is down bc Iran tried to assassinate Trump.
Might not be Iran but much closer to home.
You ever consider the question as to why a pepsi person got put in charge of SS?
Could it have been an intentional effort to weaken security for a political opponent or no protection until now for a former Democrat turned candidate.
DEI being a cover story.
How did Menendez get away with his operations for so long until he crossed Mr. B?
All of a sudden indicted and convicted.
Strange things have happened in History. A person needs some skepticism to guide thinking in times such as we live in.
Biden’s threat of rent caps should freeze rent increases, at least until Trump gets elected. Landlords are going to “lay low” for a while, “landlords” meaning the Realpage price fixing cartel.
I am not part of a Cartel. I built our Apartment business over 45 years of hard work, many times not being able to pay MY personal expenses due to occupancy rates plunging (2008 to 2011). THEN Covid and now we are in a recession!
Well, certainly not a recession for landlords. Your rents have shot higher, at the same time many (most?) landlords refinanced at sub 3%, so double plus good on the income category. And since expenses have increased a lot less than income in absolute dollar terms, profits are soaring. Yeah, times are tough, I bet. It will be a shame if you have to sell a few of your properties at 20% to 50% more than the price you paid for them, and we all know that all those tax breaks you get that owner-occupiers don’t are a horrible strain.
The fake CPI : northeast + midwest + south + west owners rent equivalent + rent CPI.
The real CPI might have crossed the 2% on the way to zero, or below.
In construction, privately owned 5+ units down from 1,000,000 to 880,000, under 1973 high. When the Fed will cut rates the 5+ units might reach a new all time high.
One million isn’t good enough.
landlords never lower their rent levels.
only way to get lower rent on average (CPI input) is new construction of cheap rental units. this is not happening at the scale needed to impact ave. rent numbers, imo.
rent may not contribute to higher CPI going forward, but rent will not contribute to lower CPI going forward either.
This was enough to further boost GDPNow to a very solid growth of 2.7% for the second quarter. No recession.
I don’t think there are 8 million immigrants without housing. The majority have been here long enough to already have housing.
Superb fascinating article on the WAR we are in. Who will win the War?
For those that may be curious and interested, click on the Fourth Turning embedded link for the explanation of the Fourth Turning cycle. It is a 80 year long cycle and the two guys that wrote the book are quite smart researchers.
https://www.theburningplatform.com/2024/07/16/they-will-do-anything-to-win/
Where to put the illegals? Delaware?
Back where they came from.