Housing Construction Activity Stronger Despite April Dip

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in April FELL 1.8 percent to a seasonally adjusted annual rate (SAAR) of 1.35 million units;
  • The rate of permits for single-family home permits filed in April ROSE, 0.9 percent to a SAAR of 859,000 units;
  • The rate of permit filings for multi-family homes FELL 6.3 percent in April to 493,000 units (SAAR);
  • The rate of all housing starts FELL 3.7 percent in April to a SAAR of 1.29 million with all the decline attributable to weaker multi-family starts; the rate of single-family starts edged up 1,000 to 894,000;
  • The rate of home completions in April INCREASED 2.8 percent from March; The pace of both single-family and multi-family completions increased.

Trends:

  • The April report on single-family permits would have been stronger had it not been for an upward revision to March data;
  • The “gap” between March new home sales (latest available) and single-family completions narrowed to 160,000 (seasonally adjusted annual rate) from 215,000 in February;
  • Permits for single-family homes represented 63.5 percent of all permits in April, UP from 61.8 percent in March;
  • At the same time, single-family homes accounted for 69.5 percent of all starts, below 70 percent for the fourth straight month.

Data Source: Census Bureau and Department of Housing and Urban Development

Image result for housing permits and starts

Led by a continued decline in multi-family activity, housing permits and starts slipped again in April. Completions of single-family homes also dropped which could be good news reducing inventory pressures.

The decline in inventories could have been the main reason behind the report yesterday that builder confidence improved in May as reported Tuesday by the National Association of Home Builders.

But the net effect of the April report by the Census Bureau and Department of Housing Development would be to continue a dour outlook for home building one of the two basic industries fueling the U.S. economy. As significantly – or perhaps more – residential construction is an endeavor that cannot be off-shored.

That said, the impact of the Trump Administration’s imposition of higher tariffs on steel could flow through to multi-family construction either increasing the cost of construction or cutting it sharply.

Despite the month-month gyrations of these data series, home construction is actually looking stronger: total permits in the first four months of this year (unaffected by weather) and starts (which do respond to weather) are each up 7.6 percent from the same period last year. Single-family permits for the first four months of this year are up 6.3 percent over the same period a year ago and starts are up 6.7 percent.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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