January 2019 Residential Building Mixed Improved

The headline residential building permits improved and construction completions improved relative to last month. But we keep our eyes on the rolling averages which did improve.

Analyst Opinion of Residential Building

The backward revisions this month were significant especially for construction completions. 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.

Overall, 2018 permits and completions were higher than 2017.

We consider this report better than last month - but because of all the backward revisions it is hard to understand if this really is true.

Over time, there is little difference between using permits or starts to compare to completions. Note that this month housing starts improved relative to last month.

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

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  • Unadjusted Construction completions are lower than permits - meaning the sector is expanding..
  • Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) is +2.2 % (permits) and -6.7 % (construction completions):

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

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Econintersect Analysis:

  • Unadjusted Building permits growth decelerated 2.2 % month-over-month, and is up 0.2 % year-over-year.
  • Unadjusted Single family building permits is down 7.1 % year-over-year.
  • Unadjusted Construction completions accelerated 23.4 % month-over-month, up 3.3 % year-over-year.

US Census Headlines:

  • building permits up 1.4 % month-over-month, down 1.5 % year-over-year
  • construction completions up 27.6 % month-over-month, up 2.1 % 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.

When more building permits are issued than residences completed - the industry is expanding. 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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