Good New Construction Data - Not Great - An Incomplete Recovery


The November New Construction Data was released at 8:30 am on Friday December 16, 2016. The report was promptly dismissed by 8:31 AM.The people reporting on the report read the summary, saw that starts were down, seasonally adjusted, and moved on to the next Trump Transition drama. If they had read the preview article on this website then they would have seen that this was actually a pretty good report.It was better than last November's report. It was better data from prior years. Starts are up over last November. Units under construction are up over last year. Completions soared compared to last November. The rest of the story is that this is not a full recovery to pre-recession levels.


New Home Starts Hit a Ten Year High - Still lower than 1991-2006. We saw nearly 61,000 new home starts. This was a drop from last month's downwardly revised 72,700 units. Total starts dropped from the revised 115,700 housing units to 82,8000 units this month. This level of one units structures is higher than what was recorded during 2007 through 2015. We had 62,4000 November single family starts during 1991. It is also nowhere near the level seen during November 2005 when there were 133,100 starts.


New Construction Under Construction Hit a Nine Year High - Still fewer than 2003-2007. This number has been concerning during the past few months. We have not had as low a level of units under construction as we had seen during 2010 after 1975. Rephrasing that statement - we were at a 35 year low during 1975. We have more than 1 million units under construction. How long will it take to sell or rent all of these units?


New Units Completed hit a eight year high - still slower than 1992 through 2007. There was a huge spike in November Completions - eclipsing 100,000 units . We are seeing the pace of completions accelerate. We are still not back to pre-recession levels.


The rolling year trends for both starts and completions reveal that we are developing at a slower pace than 1983, 1992, and 2007. New construction is needed to generate new home sales. The new home sales expectations are that  we could see 40,000 to 45,000 non-seasonally adjusted units reported as having been sold during November.


These numbers are good. They should be receiving more attention than they are receiving. The data is good - not great. The data is better than we have seen for the past decade and worse than we saw during the past generation, other than during the Great Recession and during other recessions. This is an incomplete recovery.


It's the economy.





Jack Dunn - Reclaiming Common Sense