Tuesday, March 20, 2007

Housing Starts and Completions

by Bill McBride on 3/20/2007 08:41:00 AM

The Census Bureau reports on housing Permits, Starts and Completions. Seasonally adjusted permits declined:

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,532,000. This is 2.5 percent below the revised January rate of 1,571,000 and is 28.6 percent below the February 2006 estimate of 2,147,000.
Starts rebounded:
Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,525,000. This is 9.0 percent above the revised January estimate of 1,399,000, but is 28.5 percent below the February 2006 rate of 2,132,000.
And Completions declined significantly:
Privately-owned housing completions in February were at a seasonally adjusted annual rate of 1,664,000. This is 9.4 percent below the revised January estimate of 1,836,000 and is 18.4 percent below the February 2006 rate of 2,038,000.
Click on graph for larger image.
The first graph shows Starts vs. Completions.

As expected, Completions are now following Starts "off the cliff". Completions are the key number in this release, since employment follows completions.



This graph shows starts, completions and residential construction employment. (starts are shifted 6 months into the future). Completions and residential construction employment are highly correlated, and Completions lag Starts by about 6 months.

Based on historical correlations, it is reasonable to expect residential construction employment to follow Starts and Completions "off the cliff". It is reasonable to expect significant residential construction job losses over the next several months.

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