Weak New Construction Data for August
There are three reports released each month with regard to the housing market: New Residential Construction, New Home Sales and Existing Home Sales. Today's New Construction Report for August was weak.The data revisions were mixed. The course is well set for Single Family starts and all housing completions: We will fall short of the activity we saw during 1983 and 1992.
New Home Starts Slower than August 1982, 1991. The media has been reporting that we have seen improvement regarding new home construction for _____ years running. Fill in the blank. Yes, we have seen improvement, for most months, since 2010. This is not hard to do, as the red histogram illustrates. The last time prior to the current housing recession/recovery that we had August starts this low was August of 1982. We did not even see starts as strong as August 1991 this past month. Starts are a necessity of strong economy. Spin-off sales occur when new homes are built. New appliance are needed. New furniture is need. New items to maintain homes and gardens are required. Contractors are required. New home starts are required.
New Home Starts will wall below the total seen during 1982 and 1991. We saw over 1 million total starts during 1982 and 1991. We had over 735,000 starts, calendar tear to date, during 1983 and 700,000 units during 1992. Right now we have recorded 527,500 non-seasonally adjusted starts. We are at least 170,000 units to 200,000 units off the pace of these prior years. The trend line in the first line graph illustrated that we may hit 800,00 units. Note that the December number for both years dropped a bit during December of each year. If we fall short this December, we will fall short of 800,00 units started.
Housing Starts saw mixed revisions. All housing starts were revised up from 110.6 to 11.6 for June, reverting to the advance values first reported. July was revised slightly higher from 114,000 to 114,200. Single family starts for June were revised down from 75,400 to 75,00 while July was unchanged.
The Number of Units under Construction is Relatively High. One of the highlights each month has been the elevated levels of housing units under construction.WE have seen an appreciation in new home sales prices and existing home sales prices which could accelerate or impede new and existing home sales. If homes are worth more, people may decide to move, freeing up inventory. If prices rise too quickly then people who would move may not be able to move.We tend to go through booms and busts for units under construction. Will the boom end when we have 1.2 million units under construction or 1.4 million units under construction? The number o units under construction were revised down for June from 1.034 million to 1.0286 million and for July from 1.0602 million to 1.0538 million
Housing Completions are slower than 1983-2007. Completions were only slightly better during August of 2016 than August 1982. We saw nearly half the number of completions than we recorded during 2005. How else can we compare this data. Once again. the data is only better than the worst that it has been since 1975. It was only slightly better than levels seen during recessions.
Housing Completions will fall short of those recorded during 1983 and 1992. We should see the completions number fall short of 1 million units this year. The problem is that we are completing homes faster than we are starting them. We may have a housing crisis rear its ugly head because supply is low.
Housing Completions were revised upward for June and July. There were 97,90 units completed during June, up from last month's preliminary value of 97,30. The July number was revised up from the advance value of 87,700 to 93,700.
Are we peaking? Are we heading into a slowdown due to a lack of supply? Time will tell.