Thursday, January 18, 2007

Housing: Starts and Completions

by Calculated Risk on 1/18/2007 11:06:00 AM

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

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,596,000. This is 5.5 percent above the revised November rate of 1,513,000, but is 24.3 percent below the December 2005 estimate of 2,107,000.
Starts were up for the second straight month:
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,642,000. This is 4.5 percent above the revised November estimate of 1,572,000, but is 18.0 percent below the December 2005 rate of 2,002,000.
And Completions were flat, at just below the recent record levels:
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1,900,000. This is 0.4 percent above the revised November estimate of 1,893,000, but is 2.7 percent below the December 2005 rate of 1,953,000.
Click on graph for larger image.
The first graph shows Starts vs. Completions.

I'm a little surprised at the slight rebound in starts, especially since completions and inventories are still near record levels. Still Starts have fallen "off a cliff", and 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 by this Summer.