US Housing Starts, Construction Permits: March 2018

An encouraging headline Wednesday by NAHB Eye on Housing,

“Most US States Record YTD Single-Family Permits Growth in February 2018”

provides only more evidence that US home building and real estate business have come roaring back since the US housing starts crash of September 2006.

Over the first two months of 2018, the total number of single-family permits issued nationwide reached 123,871, said the US Census Bureau’s quarterly Survey of Construction. On a year-over-year basis, this is an +11.2% increase over the February 2017 level of 111,356 single-family permits.
The results from the SOC are similar, single-family permits over the second month of 2018 was, 122,800 which is +10.2% ahead of its level over the same period of 2017, 111,400.

US Home Building and Permits: March 2018

In advance of the glowing new single-family housing building permits is joint quarterly data release from the US Census Bureau and HUD Wednesday, that total US housing starts increased slightly in March, led by multifamily construction strength. Starts increased +1.9% to a 1.32 million seasonally adjusted annual rate.

However, the pace of single-family starts declined in March, falling -3.7% to an 867,000 seasonally adjusted annual rate, due to lingering weather effects in some parts of the nation. The three-month moving average for single-family starts remained near a post-recession high rate of construction (889,000). These recent trends for single-family starts match ongoing healthy levels of the NAHB/Wells Fargo Housing Market Index, now registering a score of 69.

Year-to-date, ending in February 2018, the total number of multifamily permits issued nationwide reached 64,382. This is 5.9% ahead of its level over the second month of 2017, 60,803. The results from the SOC show an increase of 5.8% in multifamily permits over the second month of 2018, 64,300 compared to the same period of 2017, 60,800.

For the first quarter of 2018, single-family starts are +7% higher than this time in 2017, in-line with forecast for modest gains. Single-family permits were down -5.5% in March, although are recording a +5.3% improvement thus far in 2018 relative to this time in 2017.

Multifamily starts (2+ unit production) were up +14% in March, posting the largest seasonally adjusted rate (452,000) since October 2016. Multifamily permits for 5+ unit production also showed strength, gaining +23% over the February rate. Multifamily data tends to be volatile in the month-to-month data, but the three-month moving average for multifamily construction is now at its highest register since February 2017.

US Single-Family Starts: March 2018

Starts of single-family construction increased +6.3% to an 849,000-unit annual rate. Single-family starts are up +8% year-to-date, compared to the same period in 2016. National Association of Home Builders commentary on the numbers suggests “limited existing inventory and solid builder confidence” are encouraging additional building, and the builder association says

“This is right in line with forecast despite some monthly noise in the data.”

Single-family starts jumped +10.6% in the West and rose +9.3% in the Northeast. The South, which accounts for over half of single-family starts, saw starts rise +7.2%.

Multifamily construction also rebounded in June, with starts of projects with five units or more jumping 15.4% to a 359,000-unit annual pace. Even with the June surge, though, multifamily starts are down 5% year to date after five consecutive months of decline.
Multifamily activity was up sharply in the Midwest and Northeast, but fell in the South.

US Home Inventory: March 2018

Homebuilding will probably not increase significantly to eradicate an acute shortage of houses on the market, which is pushing up prices and sidelining some first-time home buyers.

Demand for housing is being driven by a robust labor market, which is underpinning the economy. Single-family home construction fell in the Northeast, South and West, but rose in the Midwest.

Starts for the volatile multi-family housing segment surged 14.4 percent to a rate of 452,000 units in March. Permits for the construction of multi-family homes jumped 19 percent to a 514,000 unit-pace.

The outlook for housing inventory was mixed. Housing completions fell 5.1 percent to 1.217 million units last month, with single-family units dropping 4.7 percent. But the stock of housing under construction rose 0.3 percent to 1.125 million, the highest level since July 2007.
Single-family units under construction climbed 0.2 percent to the highest level since June 2008.