Housing Starts Backtrack, Permitting Still Weak

Housing starts retrenched in November, taking back much of their spectacular gains of October, while permits continued to display the general weakness that has prevailed since mid-summer.  The U.S. Census Bureau and Department of Housing and Urban Development said initial construction of privately funded residential properties in November were at a seasonally adjusted annual rate of 1,090,000 units, down 18.7 percent from the October rate of 1,340,000 and 6.9 percent lower than in November 2015.  Housing starts had jumped by 25.5 percent from September to October, and were up by 23.3 percent year over year.  That increase held up through this month's revision, rising from the original estimate of 1,323,000 units to 1,340,000. 

Some backsliding had been expected, but not one as severe.  Analysts surveyed by Econoday were looking for housing starts to be in a range of 1.125,000 to 1,290,000.  The consensus was 1,230,000,

Single-family housing starts were at a seasonally adjusted annual rate of 828,000, down 4.1 percent from the revised (from 869,000) October number of 863,000 and up 5.3 percent from a year earlier.  Most of the damage to the housing starts number was in the multi-family sector which was down 43.9 percent from a month earlier to an annual rate of 259,000 starts.  This could also be viewed righting the boat as multifamily starts rose nearly 75 percent from September to October even before this month's revision from 445,000 units to 462,000.

On a non-adjusted basis, Housing starts were estimated at 82,800 compared to 115,700 in October.  Single-family starts accounted for 60,700 of that number.

Building permits also were down but not nearly as dramatically.  The seasonally adjusted annual number for November is estimated at 1,201,000, a decline of 4.7 percent from the revised October rate of 1,260,000.  That number was originally reported at 1,229,000.  The rate of permitting was 6.6 percent below that of the previous November.

Analysts' expectations for permitting ranged from 1,130,000 to 1,260,000.  The consensus was 1,240,000.

Single family authorizations were at a rate of 778,000, an increase of 0.5 percent from October's upwardly revised 774,000 rate and 5.9 percent higher than the pace a year earlier.  Multifamily permits fell by 15.8 percent from the previous month to 384,000 units.

On a non-adjusted basis, there were 90,200 permits issued during the month compared to 100,700 a month earlier.  Single family permits numbered 55,800.

Housing completions at least were up, coming in 15.4 percent higher than in October at an annual rate of 1,216,000, up 25.0 percent from a year earlier.  October completions were at the rate of 1,054,000. Revised from 1,055,000. 

Single family homes were completed at a rate 3.3 percent above the previous month, 774,000 compared to 749,000, and 20.6 percent higher than the previous year.  The rate of completions for units in buildings with five or more was 442,000, up 44.5 percent from October and 36.3 percent from November 2015.

An estimated 100,300 units were completed during the month, 67,700 of which were single family.  There were 96,500 units completed in October.

At the end of the reporting period there were 1,047,800 (unadjusted) units under construction, 446,100 single-family and 590,700 multifamily. Permits were outstanding for 129,700 units for which construction had not yet started.

Housing starts were down significantly in all four regions.  Starts in the Northeast they were down 52.1 percent for the month and declined 31.7 percent year-over-year.  In the Midwest, the decrease was 14.2 percent from October but the region maintained a 3.6 percent edge over the previous year. Starts in the South were down 9.3 percent and 6.9 percent respectively, and the West dropped by 22.1 percent for the month but were unchanged from November 2015.  

Permits in the Northeast increased by 2.8 percent compared to November but were running 11.3 percent behind authorizations a year earlier.  The rate of completion was 53.8 percent higher than in October and up 16.0 percent year-over-year

In the Midwest permits were down 8.3 percent for the month and 9.6 percent for the year. Units were completed at a 1.6 percent higher rate than in October and 67.3 percent annually.

The South saw a drop in permitting of 4.0 from October and 9.0 percent from the previous November. Completions were up by 32.1 percent and 40.6 percent for the two periods.

Permitting was down in the West by 6.1 percent month-over-month but remained 1.9 percent higher on an annual basis.  Completions were down by 20.8 percent and 20.2 percent respectively.