Jack Dunn - Reclaiming Common Sense

Like the House in "Up," New Construction is Rising


There is a considerable amount of unloved data in this economy. The alleged remarks made by the President in a closed door, private meeting dominated the airwaves Thursday through Monday. The comment by Nancy Pelosi - not so much. The Retail sales data last week got lost in the middle of the scrum. There is a looming government shutdown. Cue the end of times scene from the original "Ghostbusters." Today we received remarkable unemployment claims data, both first-time unemployment claims and continuing Claims data. Zip. Seriously good, strengthening new construction data. zip divided by a billion. Still zip. This column projected improvement, December to December , for New Home Starts, Units Under Construction, and Completions in the article "Dec. Real Estate Forecast: Up." Guess what? We went up, and up, and up.


New Home Starts were up for the seventh straight December. There were over 54,000 single family starts. It was thought that there could bee 55,000 starts or higher. Improvement is improvement. The rolling year data for starts hit 848,000 units. These are the units built during the past twelve months. This is better than what was recorded during December 2008 through November 2017. The Current Year Starts and Rolling Year Starts are the same during the month of December. Each are at 848,300. This is up 8.55% from Last December, December 2016.


The Units Under Construction increased from December of 2016. The growth year to year was not as great as expected. The data has been pointing toward and annual rate around 1.2 million units. The "rolling year" data and the "current year" data is the same thing.  Properties are added and subtracted from this data month in and month out.


Completions Exceeded 110,000 units this month. This completions data is better than December 2016 and better than any other December back to December 2008. This column had projected a potential level of 112,000 units for December. There were over 1.15 million units completed during December 2017. This is up from the 1.05 million units completed during all of 2016.


The Rolling Year data is comparable to 1992. This is not news to readers of this column. The data for starts. completions, and under construction units few to 35 year lows, or lower, during the housing recession.  This data is improving. The reporting on the data is not.


If you examine the trends the new construction data is improving. If seasonal factors are skewed one way or another for back to back months good data can be weakened and weak data can be strengthened. The end of the year analysis tells us where we are. The spike in completions bodes well for December sales. We will receive that data next week.  Inventory has been improving. We will receive that data as well. Higher inventory should spur higher sales. 


The data is the data. If you want to compare seasonally adjusted data to seasonally adjusted data, go for it. The reporting on the seasonally adjusted data in the official report was misleading. The starts data is for total starts - the starts data in this report is the single family starts.  It is challenging to forecast out 12 months from the December data, the May data, any data. The trend is your friend and the trend is higher.


It's the economy.