Permitting and Housing Starts are Finally Gaining Ground

There was a small gain in residential construction permitting in April while housing starts rose strongly, both reversing their unexpected declines in March.  Neither however has yet caught up with their year earlier numbers.

The U.S. Census Bureau and the Department of Housing and Urban Development said permits increased by 0.6 percent to a seasonally adjusted annual rate of 1,296,000 in April, besting the upwardly revised estimate of 1,288,000 in March.  The March rate was originally estimated at 1,269,000.  The April number was still 5.0 percent lower than the April 2018 rate of 1,364,000.

Analysts polled by Econoday had expected permitting to be in the range of 1,269,000 to 1,302,000.  The consensus was slightly below the actual number at 1,290,000.

Permits for single family construction continue to disappoint.  They were issued at a seasonally adjusted rate of 782,000 units during the month, 4.2 percent lower than the 816,000 (revised from 808,000) permits issued in March and down 9.4 percent from the previous April.  Multifamily construction permits picked up the slack at a rate of 467,000 units, an improvement of 7.1 percent from March and 1.5 percent year-over-year.

On a non-adjusted basis there were 119,300 residential construction permits issued during the month, 75,300 of which were for single-family units.  The comparable numbers in March were 105,700 and 69,000 units.

For the year-to-date (YTD) there have been 411,900 construction permits issued, down from 425,600 during the same period in 2018, a 3.2 percent decline. Single-family permits (a total of 260,600) are running 6.7 percent behind the 2018 number while those for multifamily construction are up 3.8 percent.

Construction on residential units was initiated at a seasonally adjusted rate of 1,235,000 in April.  This was a 5.7 percent increase from the March rate of 1,168,000 and that was an upward revision of the 1,139,000 units originally estimated.  Housing starts are still down 2.5 percent from the rate a year earlier.

These numbers beat the analysts' consensus estimate of 1,200,000 units.  Predictions ranged from 1,160,000 to 1,275,000 units. Starts were especially strong in the Northeast and Midwest.

Single-family construction was started at an annual rate of 854,000 units, up 6.2 percent from the revised (from 785,000 units) 804,000 units in March.  Single-family starts are still 4.3 percent lower than in April 2018.  Starts in building with five or more units were up 2.3 percent from March to 359,000 units representing an annual increase of 1.4 percent.

On a non-adjusted basis, there were 114,100 residential units started during the month compared to 95,800 in March. This included 81,200 single-family starts, up from 67,300.

YTD starts are running 7.2 percent behind those in 2018 at 376,900 units.  Single family starts are down 4.5 percent (to 267,300) and multifamily starts lag by 13.1 percent.

Completions declined slightly from March to a rate of 1,312,000 from a revised (from 1,313,000) 1,331,000 units.  Completions are up 5.5 percent from the previous April.

Single-family completions were at a rate of 918,000, a 4.1 percent decrease from March but 16.6 percent higher than a year earlier.  Units completed in buildings with five or more grew by 5.8 percent in March to a 381,000-unit rate but decreased 14.2 percent from April 2018.

There were 100,800 units completed during the month compared to 103,000 in March. Single-family units accounted for 71,600 units, also down from the total a month earlier of 74,700.

YTD there have been 383,100 housing units completed nationwide, up from 362,200, 5.8 percent growth.  Single family completions are up 7.6 percent from the same period in 2018 and multifamily completions increased 1.4 percent.

At the end of April there were an estimated 1,121,000 housing units under construction, 525,000 of them single-family units.  There was also a backlog of 194,000 permits that had been issued but under which construction had not yet started.

Permits in the Northeast fell by 4.0 percent from March but were 26.3 percent higher than in April 2018. Housing starts surged by 84.6 percent, putting them 48.5 percent higher on an annual basis. Completions declined by 3.0 percent and 9.2 percent from the earlier periods.

The Midwest saw an uptick of 2.2 percent in permitting for the month, but the rate was down 3.6 percent on year-over-year. Starts jumped 42.0 percent and 17.0 percent from the two earlier periods. Completions were down 5.5 percent and 2.6 percent respectively.

The South lagged the permitting rate in March by 1.2 percent and that of a year earlier by 10.7 percent. Starts were also down, by 5.7 percent and 12.2 percent respectively and completions fell 1.8 percent from March but were up 8.1 percent on an annual basis.

Permitting in the West was up 5.3 percent for the month but 2.3 percent lower year-over-year. Starts declined by 5.5 percent from March and 7.2 percent on an annual basis. The number of completions rose 2.4 percent and 12.3 percent respectively.