New Residential Construction Still Seeking a Bottom

The problem with analytical analysis is that it needs to be anchored to some baseline.  When new construction data is analyzed, it is very hard to find a baseline as the data still shows no evidence of bottoming. 

Here are the headlines for the December 2011 US Census report on new residential construction for December 2010:

BUILDING PERMITS: Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent (±2.1%) above the revised November rate of 544,000, but is 6.8 percent (±2.8%) below the December 2009 estimate of 681,000.  Single-family authorizations in December were at a rate of 440,000; this is 5.5 percent (±2.3%) above the revised November figure of 417,000. Authorizations of units in buildings with five units or more were at a rate of 172,000 in December.

HOUSING STARTS: Privately-owned housing starts in December were at a seasonally adjusted annual rate of 529,000. This is 4.3 percent (±14.1%)* below the revised November estimate of 553,000 and is 8.2 percent (±14.4%)* below the December 2009 rate of 576,000.  Single-family housing starts in December were at a rate of 417,000; this is 9.0 percent (±11.7%)* below the revised November figure of 458,000. The December rate for units in buildings with five units or more was 102,000.

HOUSING COMPLETIONS: Privately-owned housing completions in December were at a seasonally adjusted annual rate of 585,000. This is 4.1 percent (±17.7%)* above the revised November estimate of 562,000, but is 22.2 percent (±11.3%) below the December 2009 rate of 752,000.  Single-family housing completions in December were at a rate of 463,000; this is 5.5 percent (±15.3%)* above the revised November rate of 439,000. The December rate for units in buildings with five units or more was 111,000.

US Census is using seasonally adjusted data in their analysis.  The unadjusted data says residential new housing permits declined year-over-year 3% (vs the 6.8% decline calculated by US Census using seasonally adjusted data).  Permits are up or down MoM depending on whether pre or post Great Recession benchmarks are used.  Econintersect interprets the new permits data to be flat MoM.

The sometimes green shoot – apartments – is likely up MoM and YoY.  Econintersect believes the trend shows a gentle improvement in 2010, but 2011 will be judged against 2010 data.  Will this trend continue?

Completions are down YoY – and like permits, whether you consider the data up or down MoM depends on the baseline.  Econintersect agrees completions are up if compared to 2009 data – flat if compared to 2008 and 2007,  and down if compared to 2006 and 2005.

As long as there are more housing units being completed then permits issued – the new housing market is still looking for the bottom.  This month there were 56,200 completions and 47,700 permits issued.

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