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Tuesday, December 19, 2006

Housing: Starts and Completions

by Calculated Risk on 12/19/2006 08:35:00 AM

The Census Bureau reports on housing Permits, Starts and Completions. Permits are still falling:

Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,506,000. This is 3.0 percent below the revised October rate of 1,553,000 and is 31.3 percent below the November 2005 estimate of 2,191,000.
Starts rebounded:
Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,588,000. This is 6.7 percent above the revised October estimate of 1,488,000, but is 25.5 percent below the November 2005 rate of 2,131,000.
And Completions are falling, but still just below record levels:
Privately-owned housing completions in November were at a seasonally adjusted annual rate of 1,915,000. This is 0.2 percent below the revised October estimate of 1,919,000, but is 0.3 percent above the November 2005 rate of 1,909,000.
Click on graph for larger image.
The first graph shows Starts vs. Completions.

Starts have fallen "off a cliff", but completions have just started to fall.


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 Completions and residential construction employment to follow Starts "off the cliff". This would indicate the loss of 400K to 600K residential construction employment jobs over the next 6 months.