by Bill McBride on 4/17/2007 01:16:00 PM
Tuesday, April 17, 2007
The Census Bureau reports on housing Permits, Starts and Completions
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.
Based on the rapidly increasing inventory (both new and existing homes), it appears home builders are still overly optimistic. They are pulling too many permits, and still starting too many homes.
This graph shows starts, completions and residential construction employment. (starts are shifted 6 months into the future). Completions follow starts, and employment usually tracks completions.
Based on historical correlations, it is reasonable to expect BLS reported residential construction employment to follow Starts and Completions "off the cliff" soon. Yes, cash workers (many illegal immigrants) were probably the first to be let go, and many of them don't show up in the employment statistics. Still I expect BLS reported jobs to decline soon and significantly. Night still follows day.