Headlines for new residence construction data in June 2011 say permits grew by 2.5% month-over-month, while completions fell 1.7%. Econintersect’s analysis says permits fell 3.1% month-over-month, while completions fell 16.7%.
The takeaway from the above graphic is that while residential permits fell 3.1% month-over-month – the more important year-over-year data was up a solid 7.2%. Still this increase of 7.2% must be taken with regard to the state of the new home industry in general which is only 30% of the peak.
One more qualifier on the residential permits number – the increase is 69% multi-residence (apartments), which continues to be the green shoot of permits. If you are focused on single family homes only – permits fell 3.7% year-over-year.
The US Census uses a complicated formula to seasonally adjust their data. Econintersect uses a simple year-over-year analysis of the US Census unadjusted data. Compare the data for May and June: May 2011 had a bigger increase over the two preceding Mays than June 2011 has over the two preceding Junes. The implication is that June 2011 did not grow relative to past patterns. This raises questions about whether the 2.5% seasonally adjusted MoM increase for June 2011 is real.
What is important is that this was the 15th straight month of year-over-year growth for multi-residence building permits.
The headline should be that the U.S. new residence industry has had more permits issued than construction completions for the last 4 months. The industry itself has bottomed, is less than one-third of its former self – but is no longer contracting.
Including June 2011, for 56 of the last 57 months, construction completions have declined year-over-year. With 4 months straight of more permits being issued than construction completions, the worst is over for this sector – however it remains in the greatest depression seen since the the Great Depression.
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