December 2020 Residential Building Growth Improves

Headline residential building permits improved and construction completions also improved. The rolling averages improved for permits but worsened for construction completions.

Analyst Opinion of Residential Building

We seem to be seeing and bad month, followed by a good month, and then another bad month.

The backward revisions this month were small. It is always difficult to understand the trends as the backward revisions sometimes reverse trends month-to-month. The nature of this industry normally has large variations from month-to-month (mostly due to weather) so the rolling averages are the best way to view this series.

The rolling averages say this sector is growing but rollercoastering.

We consider this report both better than last month.

Over time, there is little difference between using permits or starts when one compares to completions.

Looking at residential construction employment, the year-over-year growth of employment has a reasonable correlation with housing starts.

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Econintersect Analysis:

  • The quantity of unadjusted Construction completions are essentially equal to permits.
  • Unadjusted 3-month rolling averages (comparing the current averages to the averages one year ago) is +12.5 % (permits) and +4.4 % (construction completions):

3 month Rolling Average for Year-over-Year Growth Unadjusted Data

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  • Unadjusted Building permit growth accelerated 13.4 % month-over-month and is up 25.0 % year-over-year.
  • Unadjusted Single-family building permits are up 38.3 % year-over-year.
  • Unadjusted Construction completions accelerated 11.0 % month-over-month, up 9.2 % year-over-year.

US Census Headlines:

  • building permits up 4.5 % month-over-month, up 17.3 % year-over-year
  • housing starts up 5.8 % month-over-month, up 5.2 % year-over-year
  • construction completions up 15.9 % month-over-month, up 8.0 % year-over-year.
  • the market expected (from Econoday):

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Note that Econintersect analysis herein is based on UNADJUSTED data - not the headline seasonally adjusted data.

In the graph below, any value above zero shows more permits are being issued than completions.

Difference Between New Home Building Permits and Construction Completions (unadjusted)

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