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October New Home Construction: Permits Up, Starts Down

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 October 2010 showing a slight increase in single-family home building permits and a small decrease in new home starts compared to the month before.

The report shows:

  • Building permits issued for single-family residences in October were at an annual rate of 406,000 which is 1.0 percent above the revised September rate of 402,000 and a decrease of 13.2 percent from a year ago when the rate was 468,000.
  • Housing starts for single-family residences in October were at an annual rate of 436,000 which is a decrease of 1.1 percent from the revised rate for September of 441,000 and an decrease of 8.2 percent from a year ago.
  • Homes completed in October were at a rate of 501,000 homes, an increase of 2.7 percent from September’s revised rate of 488,000 homes and a decrease of 5.6 percent from a year ago.

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 October2010 versus October 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 October 2010 there have been 386,200 permits issued for new homes compared with 369,200 this time last year for an increase of 4.6 percent.
    • In October there were 31,900 permits issued, a decrease of 7.5 percent from September.
  • Through October 2010 there have been 411,600 new homes started compared with 379,900 this time last year for an increase of 8.34 percent.
    • In October there were 36,400 new homes started, a decrease of 6.2 percent from September.
  • There have been 415,500 new homes completed through October 2010, a decrease of 1.5 percent from the year before.
    • In October there were 46,400 new homes completed, an increase of 4.9 percent from August.

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 September, 2010 (the most recent period sales data is available for) there have been 257,000 new homes sold and there have been 369,100 new homes completed, outpacing sales by 43.6 percent.
    • For the 12-month period October 2009 through September 2010 there were 340,000 new homes sold and there were 516,200 new homes completed, outpacing sales by 51.8 percent.
  • Through the end of September there have been 375,200 new homes started outpacing the new ytd home sales activity through September by 43.0 percent.

As I keep saying…..I don’t get it…..I hear some economists predicting a coming shortage of new homes, and almost everyone applauds when the number of homes being built increases. For months now, even at the drastically reduced rates of construction, there are still 50 percent more homes being built than are being sold.

 

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