Reclaiming Common Sense

The Monthly Real Estate Reports are being released for January

New Home Construction Starts, Units Under Construction and Completion are Up


New Home Construction tends to dip December to January and bounce January to January. The month to month data indicated that we could see 74,000 to 77,000 starts, The January to January data indicated a value around 68,000 to 71,000.  What was recorded and what was reported this January?


New Home Starts came in at 68,600. This was the best January level of NSA Single Family Starts since January 2007, as the economy was slowing. This is better than January 2009 through January 2019. New home starts are up 7.02% from last January. This means that the current year growth rate is also 7.02%. This is pulling up the rolling year/trailing year rate of 1.45%. The "Starts Recession" is over, for now.


Units under construction had been rising rapidly, year over year, between 2012 and 2017, and have moderated a bit the past two years. We are near an all-time record high for units under construction. The month to month growth indicated a growth rate of less than 1.00%, which would yield 1.171 million units to 1.177 million units. There was an outside chance for a spike of up to 10% January to January to 1.20 million units under construction.


Units Under Construction came in at 1.1782 million. This is up from 1.1359 million during January 2019. This is an increase of 3.7% from January 2019. The SAAR for Under Construction rose from 1.163 million during January 2019 to 1.203 million units this January, or 3.43%.  This is the highest January SAAR for under construction since January 2007. The Under Construction data can be found here. The SAAR graphic can be found here. This is the highest level of non-seasonally adjusted units under construction since January 2006. It is higher than January 2007 and higher than any January from 2008 through 2019. The graphic for the current month data can be found here.


Completions soared during 2019. It is expected that completions will drop dramatically, month to month and jump January to January, non-seasonally adjusted, with  between 91,000 and 97,000 units completed. This would have been a sizeable spike from last year's 87,200 and possibly back to levels not seen since January 2006.


Completions came in at 88,700. This is an increase of 1.7% from January 2019. The SAAR for completions rose from 1.261 million last January to 1.280 million this January. This is an increase of 1.5%. The is the highest January SAAR Completions level since 2008. The completions data can be found here. The January Only completions graphics can be found here. The SAAR Completions graphic can be found here.


New Home Construction tends to lead to New Home Sales. New Home Sales have been rising January to January.  Inventory is the name of the game, and inventory could go either way this month.  New Home sales tend to rise January through March.When the Seasonally Adjusted Annual  Rate of Sales data is released next week it could be astounding.


The Existing Home Sales data will be released this Friday. Existing Home Sales are the bulk of the real estate market.   The January to January data is expected to bounce just as the New Home Sales and New Home Construction data is expected to bounce up January to January. Existing Home Sales are expected to drop month to month and bump higher, in general, January to January. We are almost most certain to set a January Record Average Sales Price this January. Inventory, the lack thereof, has been holding back existing home sales for five years. Watch the inventory levels. We has a strong pop in inventory last January.


All real estate is local. New home sales prices are based upon the State, County, City, School District, Neighborhood, size of the home, upgrades, and motivation of the buyer and the seller. The same could be said for existing home sales. All of the data discussed in this article is non-seasonally adjusted data, except the SAAR data. Contact a REALTOR to find out what is happening in the existing home market. Some REALTORS specialize in the new home market. Do your homework. Some homes are "over-priced" when they hit the market, some are under-priced (for a quick sale,) and some are priced "just right. The inventory shortage could lead to bidding wars. Know how much you can afford before you buy.


The new construction data shows that the housing industry is "building momentum" to the upside. This should be reflected in the February jobs data. This should be reflected in the Gross Domestic Product (GDP) data when it is released this April. It is already showing up in the December JOLTS data.


The "Great Recession" was a new construction recession, a new home sales recession, and existing home sales recession, a retail sales recession, and a jobs recession rolled into a GDP recession. Retail sales are up. New Home construction is up. Retail sales are up. Jobs and workers are up. We will see about existing home sales on Friday.


It's the Economy.