The headline residential building permits slowed and construction completions slowed relative to last month. But we keep our eyes on the rolling averages which told us this was generally a slightly stronger report than last month.

Analyst Opinion of Residential Building

The backward revisions this month were slightly upward.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 slowing and completions rate of growth now slowing.

Likely much of the decline for September was due to weather (Hurricane Florence).

We consider this a slightly stronger report relative to last month – as the rolling averages improved (even if they are in negative territory).

Over time, there is little difference between using permits or starts to compare to completions.

Looking at residential construction employment, the year-over-year growth of employment has a reasonable correlation with housing starts.

 

  • The unadjusted rate of annual growth for building permits in the last 12 months has been around 10% – it is -4.7 % this month.
  • Unadjusted Construction completions are greater than permits.
  • Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) is +1.6 % (permits) and +4.9 % (construction completions):

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

      Building Permits Construction Completions Current Movement decelerating accelerating

     

    Econintersect Analysis:

  • Unadjusted Building permits growth decelerated 2.5 % month-over-month, and is down 4.7 % year-over-year.
  • Unadjusted Single family building permits is down 2.9 % year-over-year.
  • Unadjusted Construction completions decelerated 3.7 % month-over-month, up 5.7 % year-over-year.

    • US Census Headlines:

  • building permits down 0.6 % month-over-month, down 1.0 % year-over-year
  • construction completions down 11.3 % month-over-month, up 7.0 % year-over-year.
  • the market expected (from Econoday):
    • Annual Rates Consensus Range Consensus Actual Housing Starts 1.179 M to 1.251 M 1.216 M 1.201 M Housing Permits 1.230 M to 1.287 M 1.272 M 1.241 M

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

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