The August New Home Data projected the best August since 2007
We got the best new construction August since 2007.
There are three reports regarding the real estate industry that this column covers: The new home construction report, the new home sales report, and the existing home sales report. This year the new home starts had been slowing while the completions have been growing. Units under construction have been strengthening for years. New Home sales have been picking up pace. Existing Home sales are seeing inventory rise from record or new record lows, opening the opportunity for increased existing home sales.
New Home starts bottomed during 2011 and have been growing since that time. It was expected that we would see between 80,000 and 83,000 units started. Units under construction have been rising since 2012. We are approaching levels not seen since 2006 and 2007. It was projected that we could have 1.6 million or more units under construction during August. This has been the "year of completions." The annual data indicates that we could have seen a jump from last year's 118,000 and possibly up to 121,000 units. All of this plus analysis of the New Home Sales data and the Existing Home Sales data were addressed in the article "August Real Estate Forecast: Building Momentum."
Best August New Home Starts Since August 2007. We recorded 121,100 total starts, up from 115,500 last month and up from 113,800 last August. The annualized rate, seasonally adjusted, was 1.364 million, up from August 2018 when it was 1.279 Million. (Originally the August 2018 level was reported at 1.282 million.) Single Family starts increased from 80,800 last August to 82,500 this August. Single Family Starts peaked during May last year and July this year. Was this due to the Government Shutdown?
Best August New Homes Under Construction Data since August 2007. Units under Construction hit 1.11651 million units. This is higher than the 1.1585 million during August 2018. The seasonally adjusted units under construction rose from 1.126 million last August to 1.144 million units this August. The units under construction last August were reported at 1.131 million last August.
Best New Home Completions Data since December 2007. Best New Home Completions since August 2007. The total completions data jumped from 1095,500 during July to 120,600. This is up from the 113,9000 recorded during August 2018, non-seasonally adjusted. Single family completions were up from 75.800 to 84,800, and up from last August's 83,600 level. The Annualized rate moved higher from 1.232 million last August, and from 1.264 million this July, to 1.294 million. Last August the annualized rate was 1.213 million units during August of 2018.
The new construction data feeds into the new home sales data. We have had slower than normal, faster than the past decade, levels of new home sales this year. We need inventory to maintain those levels of sales. There was concern that we were below 300,000 units for a prolonged period of time. Now we are approaching 350,000 units. A level between 350,000 and 375,000 appears to be proper. The units completed may indicate a higher than expected new home sales level for either August or September, possibly October.
This was a solid, remarkable, new construction report. If you examine the starts data on a month by month basis, the same month basis, or the current year basis, things are still looking upward. The current year data is slightly behind the 2018 data and slightly ahead of the 2017 data. The under construction data is also strong. The completions data had a very nice pop from August to August. We are doing better, year to date, than we did during 2008 through 2018. We are on track with the 1989 data and a potential end of year value of close to 1.390 million units, or up 200,000 units from the end of 2018 value of 1.185 Million units.
The Great Recession was a Housing recession rolled into a Jobs recession, rolled into a retail sales recession, rolled into a GDP recession. We are in an expansion. Existing home sales will be released by the REALTORS on September 19th, and the New Home Sales data will be released September 25, 2019.
It's the economy