Construction Numbers Post Sluggish Recovery

As analysts had predicted, both housing permits and starts recovered, albeit only slightly, in July after a poor showing the previous month. The U.S. Census Bureau and the Department of Housing and Urban Development now report that housing permits are being issued at a pace higher than in 2017, but housing starts are still lagging the earlier number.

Permits for privately owned residential construction were issued in July at a seasonally adjusted annual rate of 1,311,000 units. This is an increase of 1.5 percent from the June rate of 1,292,000 (revised from 1,273,000 units).  July's permitting rate is now 4.2 percent higher than that of July 2017.

Analysts polled by Econoday had predicted permits would be at a rate ranging from 1,280,000 to 1,325,000. Their consensus was slightly below the actual number at 1,307,000.

Single family permits were up 1.9 percent month-over-month and 6.4 percent compared to a year earlier at 869,000 units.  Multifamily permitting also gained ground. The rate of 410,000 units was 1.7 percent and 2.8 percent higher than the two earlier periods.

On a non-adjusted basis there were 114,000 permits issued during the month compared to 121,600 in June.  Single family permits totaled 77,600, down from 81,700.  For 2018 through the end of June there have been 787,600 residential permits issued compared to 737,500 through the same date in 2017, an increase of 6.8 percent. Single-family permits increased by 7.5 percent , from 485,900 to 522,200.

Housing starts had plummeted in June with a reported decline of 12.3 percent.  It was apparently even worse.  The original estimate of 1,173,000 was revised lower, to 1,158,000, which gives the July number of 1,168,000 a little less bright a perspective. It represents an increase of 0.9 percent over the new June number but doesn't put it back on track on an annual basis where it is still down by 1.4 percent.

The forecast of analysts was for a more robust recovery. Estimates ranged from 1,200,000 to 1,300,000 with a consensus of 1,271,000.

Single family starts also rose 0.9 percent from the prior month to a rate of 862,000 units from 854,000.  That number was also revised lower, from an original estimate of 858,000.  The rate of single family starts is up 2.7 percent year-over-year. Multifamily construction rose 3.1 percent to a rate of 303,000 but is off 9.6 percent from the pace in July 2017.

On a non-adjusted basis there were 110,400 housing starts in July, down only a handful of units from June. Single-family starts numbered 81,800; in June the total was 83,900.  For the year to date (YTD), starts total 750,700 compared to 707,000 last year, a gain of 6.2 percent.  Single-family starts are up 7.2 percent to 534,300.

Residential units were completed at an annual rate of 1,188,000 units, a 1.7 percent decrease from June and off 0.8 percent for the year. The rate in June was estimated at 1,209,000, a substantial downward revision from the 1,261,000 units originally estimated.  Single-family completions fell 5.2 percent to 814,000 and are 3.9 percent lower on an annual basis. The rate of multifamily units reported, 371,000 is 8.2 percent higher than both the June and the July 2017 estimate.

On an unadjusted basis there were 100,900 housing units completed during the month, down from 108,500 in June.  Single-family completions totaled 66,200 compared to 75,800 the previous month.  On a YTD basis, completions are up 6.0 percent, from 639,100 to 677,300.  Single family completions are running ahead of last year by 6.3 percent.

At the end of July there were an estimated 1,122,000 residential units under construction, 521,000 of them single-family houses. There were also an estimated 175,000 permits that had been issued but for which construction had not yet started.  There were 97,000 single family permits outstanding.

Permits in the Northeast rose 5.9 percent from June and 3.3 percent from the rate in July 2017. Starts declined for both the month and the year by 4.0 percent and 18.5 percent respectively. Completions jumped 65.8 percent, bringing them 18.9 percent higher than a year earlier.

In the Midwest there was a gain of 5.8 percent in the rate of permitting both for the month and on an annual basis. Starts jumped by 11.6 percent form June and are 7.5 percent higher year-over-year. Completions were up 7.6 percent from both earlier periods.

The South saw a slight downturn in permitting from the previous month, 0.3 percent, but the rate was still 4.7 percent higher than the previous July. Starts were higher by 10.4 percent and 4.1 percent respectively, but completions dropped 6.0 percent for the month and 11.7 percent on an annual basis.

Permitting was 1.2 percent higher in the West than in June and up 2.8 percent on an annual basis. Housing starts slid by 19.6 percent and lag the previous July by 10.9 percent. There were 13.3 percent fewer completions in July than in June, but the rate continues ahead of last year by 11.8 percent.