Thursday, January 17, 2008

Housing Starts: Lowest Since 1991

by Bill McBride on 1/17/2008 09:19:00 AM

The Census Bureau reports on housing Permits, Starts and Completions.

Seasonally adjusted permits fell:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,068,000. This is 8.1 percent (±1.7%) below the revised November rate of 1,162,000 and is 34.4 percent (±2.2%) below the revised December 2006 estimate of 1,628,000.

Single-family authorizations in December were at a rate of 692,000; this is 10.1 percent (±1.6%) below the November figure of 770,000. Authorizations of units in buildings with five units or more were at a rate of 322,000 in December.
Starts fell sharply, with starts for all units and single family units at the lowest level since 1991:
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,006,000. This is 14.2 percent (±8.3%) below the revised November estimate of 1,173,000 and is 38.2 percent (±4.9%) below the revised December 2006 rate of 1,629,000.

Single-family housing starts in December were at a rate of 794,000; this is 2.9 percent (±8.7)* below the November figure of 818,000. The December rate for units in buildings with five units or more was 196,000.
And Completions declined sharply:
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1,302,000. This is 7.7 percent (±10.3%)* below the revised November estimate of 1,411,000 and is 31.0 percent (±5.8%) below the revised December 2006 rate of 1,887,000.

Single-family housing completions in December were at a rate of 1,009,000; this is 12.0 percent (±10.5%) below the November figure of 1,146,000. The December rate for units in buildings with five units or more was 278,000.
Housing Starts CompletionsClick on graph for larger image.

Here is a long term graph of starts and completions. Completions follow starts by about 6 to 7 months.

Look at what is about to happen to completions: Completions were at a 1,302 million rate in December, but are about to follow starts to below the 1.1 million level. I'd expect completions to fall rapidly over the next few months, impacting residential construction employment.

Even with single family starts at the lowest level since the '91 recession, when you look at inventories and new home sales, the builders are still starting too many homes ... but they are getting there. I'll take a look at how much further starts will probably fall soon.

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