The Census Department released its monthly New Residential Construction report for December this morning. Here are the pertinent details.

Housing Starts

  • Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,192,000. This is 8.2 percent percent below the revised November estimate of 1,299,000 and is 6.0 percent below the December 2016 rate of 1,268,000.
  • Single-family housing starts in December were at a rate of 836,000; this is 11.8 percent below the revised November figure of 948,000.
  • The December rate for units in buildings with five units or more was 352,000. An estimated 1,202,100 housing units were started in 2017. This is 2.4 percent above the 2016 figure of 1,173,800.

Building Permits

  • Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,302,000. This is 0.1 percent below the revised November rate of 1,303,000, but is 2.8 percent above the December 2016 rate of 1,266,000.
  • Single-family authorizations in December were at a rate of 881,000; this is 1.8 percent above the revised November figure of 865,000. Authorizations of units in buildings with five units or more were at a rate of 382,000 in December.
  • An estimated 1,263,400 housing units were authorized by building permits in 2017. This is 4.7 percent above the 2016 figure of 1,206,600.

Economists' Estimates

The Econoday consensus estimate for starts for December was 1.280 million units at a seasonally-adjusted annualized rate (SAAR). Instead starts fell to 1.192 million SAAR, well below the lowest estimate of 1.230 million.

Quick Retreat

Mortgage News Daily reports New Home Construction Retreats Quickly in December.

  • The housing starts number was substantially lower than analysts had anticipated. Those polled by Econoday had made predictions ranging from 1,230,000 to 1,320,000 units, with a consensus of 1,280,000.
  • The performance in the single-family sector was significantly worse. Those starts dropped 11.8 percent compared to November, to a rate of 836,000 units although they still retained a 3.5 percent edge over the previous December. The estimate for November starts was revised from 930,000 to 948,000. Starts in buildings with five or more units increased from 343,000 to 352,000, a 2.6 percent gain, and were 21.6 percent lower than the same month in 2016
  • On a non-adjusted basis, there were 80,300 housing units started in December compared to 98,100 in November. Single-family starts dropped from 69,300 to 54,300.
  • The year-end estimate for all of 2017 is a total of 1,202,100 housing starts. This is an increase of 2.4 percent compared to the prior year.

By Region

Image placeholder title

Single-Family Starts

RECOMMENDED ARTICLES

  • Total: -1.8%
  • Northeast: - 24.2%
  • Midwest: -8.5%
  • South: -16.6%
  • West: +0.0%

"Very Solid Report"

Let's return to Econoday for the laugh of the day.

Here is Econoday's opening gambit.

"A surprising but perhaps one-time drop in single-family starts masks what is otherwise a very solid housing starts and permits report for December. ... But the backlog behind future starts continues to build as permits came in very strong, virtually steady at a 1.302 million rate and showing a noticeable 1.8 percent gain for single-family permits to 881,000."

That is easily disproved nonsense.

Starts vs Permits

Image placeholder title

Starts vs. Permits Synopsis

  • Permits are not a leading indicator of anything.
  • If there are sales, homebuilders will start homes.
  • If there are not sales, homebuilders will not start construction no matter how many permits they have.
  • Although permits are required to do a start, permits do not represent a "backlog behind future starts".

The Weather

Econoday made this claim: "Starts can be affected by weather which along with related adjustments are always factors for this reading in the winter months."

It's amusing how economists never seem to know what the weather "was" until economic reports come out a month later.

Mike "Mish" Shedlock

Housing Starts and Permits Dive Again, Mainstream Media Blames Hurricanes: What's the Real Story?

Housing starts and permits disappoint again. Both sets of numbers were well under the consensus estimates. Mainstream media was quick to blame the hurricanes, but starts were also down in the Midwest and Notheast. Let's take a look at the numbers and the real story.

Housing Starts Rise 3.2% but Single-Family Starts Dive Another 4.6%

Housing starts rebounded in December but the strength is entirely in multi-family units.

Housing Starts: Yet Another Unexpected Thud, Down 11.2 Percent

Housing starts gave back all of their 3.2 percent increase in November and then some.

July Housing Starts: Economists Miss the Mark Badly

Economists expectations for July housing starts was 8.8% too high. They blame lumber tariffs and labor shortages.

Housing Starts Unexpectedly Plunge 12.3% in June, Permits Down 2.2%

Economists were shocked by today's housing report. Let's go over the details.

Housing Starts Dive 8.7 Percent: Awful Single-Family Stats in Every Region

Evidence stacked up that the surge in January was a one-hit wonder. Housing starts continued their volatile trend lower.

Housing Starts Unexpectedly Sink, Multi-Family in Huge 34% Retreat Year-Over-Year

Construction spending for the second quarter is off to a slow start as judged by housing starts. The Econoday consensus was for a 1% rise. Instead, starts declined nearly 5% from the initial June report, now revised lower.

Housing Starts Jump 9.2%, Permits Decline 5.7%

Housing starts are up but permits are down. The current overall level of activity is less than occurred in 1962.

Housing Starts Retreat 3.7% in April, March Revised Higher

Housing starts pulled back a bit more than economists expected in April. Regionally, only the South had a good month.