November 2018 Residential Building Improved

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

Analyst Opinion of Residential Building

The backward revisions this month were slight. 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 - and it shows permits rate of growth improving and completions rate of growth now slowing.

We consider this a stronger report relative to last month.

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.

 

  • Unadjusted Construction completions are less than permits.
  • Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) is +0.5 % (permits) and -2.2 % (construction completions):

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

  Building Permits Construction Completions
Current Movement accelerating decelerating

 

Econintersect Analysis:

  • Unadjusted Building permits growth accelerated 6.1 % month-over-month and is up 4.8 % year-over-year.
  • Unadjusted Single family building permits is down 1.8 % year-over-year.
  • Unadjusted Construction completions accelerated 4.9 % month-over-month, down 3.5 % year-over-year.

US Census Headlines:

  • building permits up 5.0 % month-over-month, up 0.4 % year-over-year
  • construction completions up 0.4 % month-over-month, down 3.9 % year-over-year.
  • the market expected (from Econoday):
Annual Rates Consensus Range Consensus Actual
Housing Starts 1.200 M to 1.252 M 1.222 M 1,256 M
Housing Permits 1.250 M to 1.275 M 1.258 M 1,328 M

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 - and this expansion was underway for three years (except for the last two months in 2014). In the graph below, any value above zero shows more permits are being issued than completions.

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