April 2016 Residential Building Situation Is Soft

Be careful in analyzing this data set with a microscope as the potential error ranges and backward revisions are significant. Also the nature of this industry variations from month to month so the rolling averages are the best way to view this series – and the data remains in the range we have seen over the last 3 years (although permits is at the low end of the range). The slowing of building permits continues to be to softness in multiple family dwellings.

The unadjusted rate of annual growth for building permits in the last 12 months has been around 10% – it is a -13.1 % this month.

Construction completions are lower than permits this month for the 16th month in a row (when permits exceed completions – this sector is growing)..

Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) is 3.3 % (permits) and 14.2 % (construction completions):

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

  Building Permits Construction Completions Current Movement decelerating decelerating

Unadjusted 3 Month Rolling Average of Year-over-Year Growth – Building Permit (blue line) and Construction Completions (red line)

Econintersect Analysis:

Building permits growth decelerated 13.1 % month-over-month, and is down6.1 % year-over-year.

Single family building permits grew 3.5 % year-over-year.

Construction completions decelerated 34.1 % month-over-month, down 5.8 % year-over-year.

US Census Headlines:

building permits up 3.6 % month-over-month, down 5.3 % year-over-year

construction completions down 11.0 % month-over-month, down 7.4 % year-over-year.

the market expected (from Bloomberg):

Annual Rates Consensus Range Consensus Actual Housing Starts 1.100 M to 1.185 M 1.135 M 1.172 M Housing Permits 1.110 M to 1.180 M 1.130 M 1.116 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.