Back in 2013 when I attended the UCLA Anderson Housing Conference I saw unbridled enthusiasm for housing starts to reach 1,500,000 in a very short time. I thought that considering housing demand from 2008 to the present that this goal would be impossible to reach. As I expected, housing demand has been slow and steady rather than parabolic, sometimes my fellow housing economist, analyst and pundits like to ignore much like the Gold Bugs and Anti Central bank folks deny the growing economy and instead over-hype its impending demise.
The slow and steady theme still continues with housing as starts and unit sales for new homes still very low. In fact, adjusting to population using a 6 month moving average, new home sales are below the tail end of 5 out of the last 6 recession today, as we are 2 years away from the longest economic expansion on record in the U.S.
To paraphrase Ernest Ruterford, demographics matter, the rest is stamp collecting.
On with the report!
Today, the U.S. Census Bureau reported that there were 1,172,000 housing starts. Housing permits came in at 1,229,000. The data from this report isn’t as bad the headline might indicate. We are seeing the same slow and steady movement with some violent swings in housing start data. The trend is important and trend has been the same for some time.
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent (±8.8 percent)* below the revised March estimate of 1,203,000, but is 0.7 percent (±7.0 percent)* above the April 2016 rate of 1,164,000. Single-family housing starts in April were at a rate of 835,000; this is 0.4 percent (±8.6 percent)* above the revised March figure of 832,000. The April rate for units in buildings with five units or more was 328,000.
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,229,000. This is 2.5 percent (±1.1 percent) below the revised March rate of 1,260,000, but is 5.7 percent (±1.4 percent) above the April 2016 rate of 1,163,000. Single-family authorizations in April were at a rate of 789,000; this is 4.5 percent (±0.8 percent) below the revised March figure of 826,000. Authorizations of units in buildings with five units or more were at a rate of 403,000 in April.
Theme now has been in housing starts is that multifamily construction has cooled off big time in terms of rate of growth but single family starts are still rising. This is the key for housing right now is the year over year growth in single family.
From Calculated Risk:
Single family starts are up 8.8%, year over year. This is the best metric to track for starts. It is going in a positive direction and should be for some time. While some people might say this is bad report, ignore them, its the same old boring housing story for years now.
Slow and Steady is the name of the game and demographics will get better for home ownership by the years 2020-2024.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami