January 2018 Residential Building Again Mixed

The headline residential building permits improved and construction completions declined. But we keep our eyes on the rolling averages because of the significant monthly fluctuations which worsened.

Analyst Opinion of Residential Building

The backward revisions this month were mmixed.The nature of this industry normally has large variations from month to month (mostly due to weather) so the rolling averages are the best way to view this series – and it shows permits rate of growth declined and completions rate of growth declined.

We consider this a similar report to last month.

Looking at residential construction employment, the year-over-year growth of employment is almost correlating with housing starts.

The unadjusted rate of annual growth for building permits in the last 12 months has been around 10% – it is +10.5 % this month.

Unadjusted Construction completions are well below permits – but there has been a general slowing trend for permits and completions..

Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) is +6.8 % (permits) and +2.8 % (construction completions):

3 month Rolling Average for Year-over-Year Growth Unadjusted Data

Building Permits Construction Completions Current Movement decelerating decelerating

Econintersect Analysis:

Unadjusted Building permits growth accelerated 10.5 % month-over-month, and is up 12.4 % year-over-year.

Unadjusted Single family building permits is up 14.0 % year-over-year.

Unadjusted Construction completions decelerated 5.4 % month-over-month, up 3.9 % year-over-year.

US Census Headlines:

building permits up 7.4 % month-over-month, up 7.4 % year-over-year [same percentage – no typo]

construction completions down 1.9 % month-over-month, up 7.7 % year-over-year.

the market expected (from Bloomberg / Econoday):

Annual Rates Consensus Range Consensus Actual Housing Starts 1.210 M to 1.305 M 1.230 M 1.326 M Housing Permits 1.260 M to 1.320 M 1.300 M

1.396 M

Note that Econintersect analysis herein is based on UNADJUSTED data – not the headline seasonally adjusted data.

When more building permits are issued than residences completed – the industry is expanding – and this expansion was underway for three years (except for the last two months in 2014). In the graph below, any value above zero shows more permits are being issued than completions.