New Residential Construction Report: November 2009

Subtitle: Bounce Looking Wobbly

Today’s New Residential Construction Report continued to indicate a weak recovery for the new home market showing the first year-over-year increases to both permits and starts seen in at least 44 months (44 starts, 45 permits).

It’s clear now that the government’s housing stimulus tax credit and loose FHA lending policies have worked to prop both new and existing home sales.

The government’s efforts, which now include an extension of an even more broad housing tax credit, have sponsored demand and provided the new home market with a more fertile environment to clear.

Nonetheless, at 482K single family units (SAAR), the level of national housing starts still remains substantially below that seen in October 2008.

With the substantial headwinds of rising unemployment, epic levels of foreclosure and delinquency, mounting bankruptcies, contracting consumer credit, and falling wages, an overhang of inventory and still falling home prices, the environment for “organic” home sales remains weak and likely very fragile.

Any substantial departure from the current perception of a strong “V”-shaped recovery (i.e. stock selloff, protracted high unemployment, etc.) would likely send both new and existing home sales down for another go at the lows seen last March.

Single family housing permits, the most leading of indicators, increased 12.1% nationally as compared to November 2008 but still remains an astonishing 72.66% below the peak in January 2005.

To illustrate the extent to which permits and starts have declined, I have created the following charts (click for larger versions) that show the percentage changes of the current values on a year-over-year basis as well as compared to the peak year of 2004.

Here are the seasonally adjusted statistics outlined in today’s report:

Housing Permits

Nationally

Single family housing permits increased 12.1% as compared to November 2008.

Regionally

For the Northeast, single family housing increased 6.4% as compared to November 2008.
For the Midwest, single family housing permits increased 1.4% as compared to November 2008.
For the South, single family housing permits increased 15.3% compared to November 2008.
For the West, single family housing permits increased 16.3% as compared to November 2008.

Housing Starts

Nationally

Single family housing starts increased 5.5% as compared to November 2008.

Regionally

For the Northeast, single family housing starts increased 12.2% as compared to November 2008.
For the Midwest, single family housing starts declined 13.6% as compared to November 2008.
For the South, single family housing starts increased 12.9% as compared to November 2008.
For the West, single family housing starts increased 2.1% as compared to November 2008.

Housing Completions

Nationally

Single family housing completions down 31.1% as compared to November 2008.

Regionally

For the Northeast, single family housing completions down 25.8% as compared to November 2008.
For the Midwest, single family housing completions down 28.7% as compared to November 2008.
For the South, single family housing completions down 35.3% as compared to November 2008.
For the West, single family housing completions down 25.8% as compared to November 2008.