Good News from the New Construction Data
We received good news this week regarding the new construction data. Instead of covering good news, the media has focused on Charlottesville, Historic Statues, and the President's tweets. This column produced an article forecasting the potential for the New Construction report for July.There are many ways to look at the data. It often takes looking at the month to month expected changes, the same month expected changes, the rolling year data, and the current data. The Current Year data is showing strength. The Rolling Year Data, data that shows us where we have been, has shown improvement. It was thought that New single-family starts could exceed 80,000 units. It was thought that the number of units under construction could approach 1.1 million units. It was thought that completions could exceed 100,000 units.
July New Construction showed strength in Starts, Under Construction, and Completions. The new single family starts data did exceed 80,000 units, hitting 81,100 units. The under construction data just fell short of 1.1 million units coming in at 1.0892 million units. The completions data exceeded 100,000 units with 100,500 units completed. This is all really good news. We may see new home sales surge as the completions pick up pace. We have a dearth of existing home inventory. Even though the average sales price of new homes far exceed existing homes they could relieve some of the pressure.
The Rolling Year Data for starts and completions are pointing higher. If you look at the rolling year data for starts and completions you can see that starts are doing well with 821,000 starts during the past twelve months. This is better than July 1991 and July 2008-July 2016, yet it is slower than July 1992 through July 2007. This make sense taking a look at the month only histogram. A similar story is told when we examine the rolling year data for completions. Completions during the past twelve months hit 1.27 million units. this is better than July 1992 when we saw 1.12 million units completed. This is also slower than July 1993 through July 2008.
The Current Year Data is pointing higher for starts and completions. If you examine the data you can see that both starts and completions are better than they were during 2016, as of July. The current year data for starts does also show that we are at a slower pace than 1983, 1992, 2007 and 2008. The completions data shows that we are doing better than we were during 1992 and 2008. It is really important to note that when we hit bottom during 2010 that we truly "hit bottom." We lost all of the growth in monthly starts and completions that we achieved between 1975 and 2005. Put another way, we lost 30 years of growth during a span of just five years.It is also important to notice that we had a housing recession between 1985 and 1992.
Will it take thirteen years to recover to our 2005 units level? Time will tell. We had a jobs recession that was marked by part-time job expansion and full-time job recovery. The jobs recession began during the Summer of 2007 when we had people employment during the month of July.
Good news gets 15 seconds of fame. Controversy gets 15 hours or 15 days of blaring chatter and press.We have a President that has added more workers to the workforce during his first six months as President than Presidents Reagan, Clinton. Bush 43, or Obama. He has added over 4.5 million non-seasonally adjusted jobs and reduced the number of unemployed workers by nearly 1 million workers. Retail sales are on track for their best year ever. First-time Unemployment claims were at a forty-nine year low for the second week of August. The continuing claims data is similarly at a forty-six year low for the first week of August, remembering that continuing claims data trails first-time claims data by one week. The rate of inflation is actually above the 1.7% that was reported and may be closer to 2.77%, or higher, due to medical costs and housing costs rising faster than 3%. All of this data is connected. As we see full-time jobs increase in number, as we see participation increase, and as we see more homes being built and sold we will see an increase in jobs and an increase in retail sales, which will lead to more home sales, automobile sales, and retail sales.
It's the economy.