The New Residential Construction Report Shows Housing Starts Rise 1.9 Percent

The negative revisions in housing starts continues. Absent the revision, starts rose about 1.0 percent.

Via incentives, mortgage write downs, and limited availability of existing homes to buy, the builders are holding up much better than real estate agents.

Permits

• Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,487,000.
• This is 1.1 percent above the revised September rate of 1,471,000, but is 4.4 percent below the October 2022 rate of 1,555,000.
• Single-family authorizations in October were at a rate of 968,000; this is 0.5 percent above the revised September figure of 963,000.
• Authorizations of units in buildings with five units or more were at a rate of 469,000 in October.

Housing Starts

• Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,372,000.
• This is 1.9 percent (±13.5 percent) above the revised September estimate of 1,346,000, but is 4.2 percent (±10.0 percent) below the October 2022 rate of 1,432,000.
• Single‐family housing starts in October were at a rate of 970,000; this is 0.2 percent (±8.8 percent) above the revised September figure of 968,000.
• The October rate for units in buildings with five units or more was 382,000.

Completions

• Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,410,000.
• This is 4.6 percent (±11.6 percent) below the revised September estimate of 1,478,000, but is 4.6 percent (±13.2 percent) above the October 2022 rate of 1,348,000.
• Single-family housing completions in October were at a rate of 993,000; this is 0.9 percent (±12.3 percent) below the revised September rate of 1,002,000.
• The October rate for units in buildings with five units or more was 408,000.

Margins of Error

Note the margins of error in this report, (±13.5 percent) for starts and (±11.6 percent) for completions.

The reports are heavily revised, typically to the downside.

Things Relatively Stable In 2023

• Starts and permits have been relatively stable since November of 2022.
• Starts peaked at 1,803,000 in April of 2022, at a seasonally-adjusted annualized rate (SAAR), and are now 1,372,000. That’s a decline of 23.9 percent.
• Permits peaked at 1,948,000 in December of 2021, at a seasonally-adjusted annualized rate (SAAR), and are now 1,487,000.That’s a decline of 23.7 percent.

Major Boom-Bust Swings

The major boom-bust cycles are largely a result of Fed policy. The results you see from 2020-present are almost entirely due to Fed QE then tightening policy.

NAHB Housing Sentiment and Traffic Head Toward the Post-Pandemic Low

The National Association of Homebuilders survey is one of the grimmest since the Covid pandemic.

For discussion, please see NAHB Housing Sentiment and Traffic Head Toward the Post-Pandemic Low

Existing Home Sales vs New Home Sales

On October 19, I noted Existing Home Sales Drop Another Two Percent to a 13-Year Low

In sharp contrast, on October 25, I noted New Home Sales Jump 12.3 Percent Smash Expectations

New home sales are much better than existing home sales because builders are offering mortgage rate buydowns, build smaller homes, and are cutting back on lot and room sizes.

Add it all up and you are not getting a bargain buying anything today. Blame the Fed for these conditions.

How the Fed Destroyed the Housing Market and Created Inflation in Pictures

For discussion of the Fed’s role in this mess, please see How the Fed Destroyed the Housing Market and Created Inflation in Pictures

The Fed is largely responsible for the Great Recession crash, but this one is totally on them.