Residential New Construction June 2011

The June 2011 Residential construction report showed Housing starts increased 14.6% from May to a level of 629,000. This is 16.7% above June 2010 and a 6 month high. New Residential Construction has a margin of error often above the monthly percentage increases, so take these monthly changes with a grain of salt. June, for example, has a error margin of 10.9 percentage points. May had no change once revised from the originally reported 3.5% gain.



Single family housing starts increased 9.4% from May and is almost no change, 0.4% from June 2010. Single family housing is 75% of all residential housing starts.

Housing of 5 or more units increased 31.8% for June and is up 104.8% for the year. Guess all of those people who were foreclosed on will need an apartment now, assuming they have any money to make rent. In other economic reports, rental vacancy rates are dropping and rents are increasing.

Building permits, also increased 2.5% to 624,000 and are up 6.7% from this time last year. Single family building permits increased 0.2% from May, which was an all time low. Below is the St. Louis Federal Reserve FRED graph for Building permits. The graph shows building permits are not always a smooth line from month to month.



Housing Completions dropped -1.7% but are down -39.3% from June 2010. Calculated Risk calculates a 1 year lag between housing starts and completions, so this number reflects housing starts from 2010.

This report has a large variance, so to establish a trend line one must take into account months of data. This report is also seasonally adjusted, but not tornado adjusted, so those believing June increased due to summer exclusively, take into account there are seasonal adjustments to this report.

One thing to take away from this report is multi-family, otherwise known as rental units, are really taking off and no surprise there since the mortgage lending standards are so tight and there are so many foreclosures. A silver lining to the destruction of the American Dream.

I recommend Calculated Risk, the uber site on housing data, for more graphs and analysis.

Here are May's graphs and original numbers.

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Thanks for RE coverage, links

A source for the flim-flam reported by corporate media is the confusion between housing starts and permits taken out while localities are still keeping their impact fees extremely low. In many cases, taking out a permit or a number of permits (subdivision) doesn't seriously mean "new housing starts," rather a hedging strategy anticipating that local governments are increasingly pressed to return to earlier higher permit fees.

Thanks for link to Calculated Risk. Also thanks for WSJ story on recent Reis report.

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