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Building Permits Jump in March; New Home Construction Still Outpacing Sales

New construction dn-3

The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for March 2010 showing an increase in building permits and a decrease in new home starts from February.

The report shows the following:

  • Building permits issued for single-family residences in March were at an annual rate of 543,000 which is 5.6 percent above the revised February rate of 514,000 and an increase of 50.8 percent from a year ago when the rate was 360,000.
  • Housing starts for single-family residences in March were at an annual rate of 531,000 which is a decrease of 0.9 percent from February’s revised rate of 536,000 and an increase of 47.1 percent from a year ago.
  • Homes completed in March were at a rate of 486,000 homes, up 5.9 percent from February’s rate of 459,000 homes and a decrease of 11.2 percent from a year ago when the rate was 547,000 homes.

As I say every month, we need to remember that all the numbers above are “seasonally adjusted” annual rates and the year over year comparisons are just comparing the numbers for March 2010 versus March 2009. Another way I like to look at where things stand is to simply look at the year to date data; actual numbers, not seasonally adjusted, compared to last years ytd numbers at this same time. I think this may give a little better comparison so those numbers are below:

  • Through March 2010 there have been 116,400 permits issued for new homes compared with 80,100 this time last year for an increase of 45.4 percent.
    • In March there were 50,600 permits issued, an increase from February’s 35,000 permits.
  • Through March 2010 there have been 114,300 new homes started compared with 78,300 this time last year for an increase of 46.0 percent.
    • In March there were 46,900 new homes started, an increase from February’s 35,700 new starts.
  • There have been 98,600 new homes completed through March 2010, compared with 116,800 this time last year for a decline of 15.6 percent.
    • In March there were 37,600 new homes completed, an increase from February’s 31,000 completions.

Let’s do one of my favorite things and look at the raw numbers and not seasonally-adjusted numbers to compare construction activity to sales:

  • Through the end of February, 2010 there have been 46,000 new homes sold and there have been 61,000 new homes completed, outpacing sales by 32.6 percent.
  • Through the end of February there have been 67,400 new homes started outpacing the new ytd home sales activity through February by over 46.5 percent.

While I like to see the optimism from builders about the market, and have to have hope that they see market demand that maybe isn’t showing up in the numbers yet, I still have to say I think builders are being too optimistic about the housing market and are perhaps seeing a recovery and demand that is not here yet. Granted, we are going into spring, typically a good sales season, although we are also going to say goodbye to any stimulus received by the homebuyer tax credit at the end of this month. If new home sales jumps significantly over the next couple of months maybe supply and demand will come back in line. Time will tell..

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