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New home construction continues at record low pace for the year

New construction dn-3

Last month I talked about how in 1959 the census bureau first started keeping track of new home construction activity and reported that there were 1.5 million new homes started that year and that, “unless something changes dramatically, 2011 will hit a new record low of new home starts. Well, unfortunately, the report for August paints a pretty bleak picture as well and in fact, shows new home starts are at an even lower rate than last month dropping from a seasonally adjusted annual rate of 423,000 homes the prior month to 417,000 homes in August.

The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued their report on New Residential Construction for August 2011 showing an increase in single-family home building permits from the month before of 2.5 percent and a 1.4 percent decrease in new home starts compared to the month before. Highlights from the August 2011 Report:

  • Building permits issued for single-family residences were at an annual rate of 413,000 homes which is 2.5 percent above the prior month and an increase of 2.0 percent from a year before.
  • Housing starts for single-family residences were at an annual rate of 417,000 which is a decrease of 1.4 percent from the prior month and a decrease of 2.3 percent from a year before.
  • Homes completed were at an annual rate of 477,000 homes, which is a decrease of 0.2 percent from the prior month and a decrease of 1.0 percent from a year before.

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 the current month versus the a year before. 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:

  • For 2011 there have been 284,400 permits issued for new homes compared with 320,300 this time year for a decrease of 11.2 percent.
  • For 2011 there have been 291,400 new homes started compared with 336,400 this time last year for a decrease of 13.4 percent.
  • For 2011 there have been 280,000 new homes completed compared with 324,900 this time last year for a decrease of 13.8 percent.

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:

  • In the 12 month period through July 2011 (the most recent period sales data is available for) there were 300,000 new homes sold and there were 451,100 new homes completed, outpacing sales by 50 percent.

 

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