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Thursday, April 16, 2020

Comments on March Housing Starts

by Calculated Risk on 4/16/2020 11:50:00 AM

This was partially pre-crisis. Although housing starts will decline significantly during the crisis, residential construction is considered essential, and starts will not decline as sharply as some other sectors.

Earlier: Housing Starts decreased to 1.216 Million Annual Rate in March

Total housing starts in March were below expectations and revisions to prior months were negative.

The housing starts report showed starts were down 22.3% in March compared to February, but starts were still up 1.4% year-over-year compared to March 2019.

Single family starts were up 2.8% year-over-year, and multi-family starts were down 1.6% YoY.

This first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red).

Starts Housing 2019 and 2020Click on graph for larger image.

Starts were up 1.4% in March compared to March 2019.

Last year, in 2019, starts picked up in the 2nd half of the year, so the comparisons are easy early in the year.

Starts will be down YoY over the next several months due to impact from COVID-19.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

Multifamily Starts and completionsThe blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession - but turned down, and has moved sideways recently.  Completions (red line) had lagged behind - then completions caught up with starts- although starts had picked up a little again lately.

Single family Starts and completionsThe second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the relatively low level of single family starts and completions.  The "wide bottom" was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions once the crisis ends.