by Bill McBride on 10/20/2011 04:35:00 PM
Thursday, October 20, 2011
• Existing Home Sales in September: 4.91 million SAAR, 8.5 months of supply
• Philly Fed Survey shows Expansion, Existing Home Sales NSA Graph
• Existing Home Sales graphs
On Tuesday, in a discussion of "builder confidence", I mentioned that "the builders delivered a record low number of housing units last year - and will probably break that record again this year."
I should have left out the "probably"; the builders will deliver a record low number of housing units this year (see the table at the bottom).
I am upping my forecast for multi-family deliveries this year. Usually it takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year. I still expect a record low number of multi-family units completed this year, however the builders have clearly accelerated construction on some projects (shorter time to completion).
The following graph shows the lag between multi-family starts and completions using a 12 month rolling total.
The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.
Click on graph for larger image in graph gallery.
The rolling 12 month total for starts (blue line) is now above the rolling 12 month for completions (red line). However completions are now moving up too.
It is important to note that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment (RI). Still this is bright spot for construction.
Below is a table of net housing units added to the housing stock since 1990. Note: Demolitions / scrappage estimated.
This means there will be a record low number of housing units added to the housing stock this year (good news with all the excess inventory), and that the overhang of excess inventory should decline significantly in 2011 depending on the rate of household formation (and that depends on jobs).
|Housing Units added to Stock (000s)|
|1 to 4 Units||5+ Units||Manufactured Homes||Sub-Total||Demolitions / Scrappage||Total added to Stock|