The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for June 2010 showing a decrease in building permits and a decrease in new home starts from May.
The report shows the following:
- Building permits issued for single-family residences in June were at an annual rate of 421,000 which is 3.4 percent below the revised May rate of 4216,000 and a decrease of 6.7 percent from a year ago when the rate was 451,000.
- Housing starts for single-family residences in June were at an annual rate of 454,000 which is a decrease of 0.7 percent from the revised rate for May of 457,000 and an decrease of 4.6 percent from a year ago.
- Homes completed in June were at a rate of 676,000 homes, an increase of 31.3 percent from May’s revised rate of 515,000 homes and an increase of 32.5 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 June 2010 versus June 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 June 2010 there have been 245,100 permits issued for new homes compared with 203,000 this time last year for an increase of 20.7 percent.
- In June there were 42,900 permits issued, an increase from May’s 42,100 permits.
- Through June 2010 there have been 256,400 new homes started compared with 202,100 this time last year for an increase of 26.9 percent.
- In June there were 45,500 new homes started, an increase from May’s 43,300 new starts.
- There have been 243,800 new homes completed through June 2010, pretty much the same as this time last year when there were 243,600 homes completed.
- In June there were 60,000 new homes completed, an increase from May’s 42,600 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 May, 2010 (the most recent period sales data is available for) there have been 159,000 new homes sold and there have been 183,800 new homes completed, outpacing sales by 15.6 percent.
- For the 12-month period June 2009 through May 2010 there were 383,000 new homes sold and there were 504,800 new homes completed, outpacing sales by 31.8 percent.
- Through the end of May there have been 210,900 new homes started outpacing the new ytd home sales activity through May by 32.6 percent.
As expected, building permits and starts have dropped after the temporary spike upward which was the result of home-buyers rushing tobeat the tax-credit deadline of April 30th. A concern of mine however is that new home starts and permits continue to outpace new home sales in both YTD numbers as well as in the prior 12 month period as I have shown above. Replenishing inventory of new homes would make sense if the underlying real estate market was showing some solid signs of recovery and growth but unfortunately it is not so I’m afraid if this trend continues it is going to lead to an over-supply of new homes again which will not be good.