{"id":1738,"date":"2020-05-19T12:52:11","date_gmt":"2020-05-19T16:52:11","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1738"},"modified":"2020-05-19T12:52:11","modified_gmt":"2020-05-19T16:52:11","slug":"april-housing-starts-and-permits","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1738","title":{"rendered":"April Housing Starts and Permits"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Starts: -30.2%; Year-to-Date: +7.6%; 1-Family:\n-29.4%; Multi-Family: -40.1%\/ Permits: -20.8%; Year-to-Date: +3.7%; 1-Family:\n-24.3%; Multi-Family: -14.2% <\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe housing market has taken a big hit, but don\u2019t\ncount it out just yet.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT MEANS:<\/strong> \u00a0As expected, home construction faltered in April.\u00a0 Multi-family projects were cut back more than single-family, but both were down massively.\u00a0 <\/em><\/strong>Regionally, the differences were fairly large, though every area posted a decline.\u00a0Starts fell by \u201conly\u201d 14.9% in the Midwest, were off 26% in the South and cratered by over 40% in both the Midwest and Northeast.\u00a0 But these data need to be put into perspective.\u00a0 Construction was really strong going into the pandemic and the total number of units started during the first four months of this year was still up sharply over the same period in 2019<\/em><\/strong>.\u00a0 That was in spite of two months of huge declines.\u00a0 The only area where activity was down during the first four months was in the Northeast and that decline was modest.\u00a0 Looking forward, permit requests were not off as much as starts and the gap between the two grew dramatically.<\/em><\/strong>\u00a0 As I have noted in the past, builders don\u2019t pay for permits just to have them sitting around<\/em><\/strong>.\u00a0 Indeed, homes permitted but not yet started were down from the April 2019 level, so there is not a great backlog. From the peak set in January, April housing starts were down 45%.\u00a0 That provides lots of room for improvement, especially since permit requests were off only about 30%.\u00a0 So look for activity to rise going forward.<\/p>\n\n\n\n

IMPLICATIONS:The housing market was leading the way until the pandemic shut things down.<\/em><\/strong>\u00a0 Where it goes from here is not totally clear but it is likely that April was the cruelest month for this sector as it was for just about every other one in the economy.<\/em><\/strong>\u00a0 Mortgage rates are down to historic lows and demand seems to be reviving.\u00a0 But the problem is buyer uncertainty about making a purchase in this environment.\u00a0 That consists of both the willingness to visit homes and the ability or readiness to commit to the largest purchase they make.<\/em><\/strong>\u00a0 Listings are dropping like rocks and it is not clear that virtual tours do it for many or even most buyers.\u00a0 That is less of an issue for new-home buyers, but still a concern. Starts were at such a low level in April that it is still likely that residential construction will be off by at least 25% this quarter and it could take a year or more to get back to the January peak pace.\u00a0 Meanwhile, back in the markets, investors keep searching for the positive and are largely dismissing the negative as being a remnant of the past.<\/em><\/strong>\u00a0 That is what has powered the massive upturn, not any hard evidence that a vaccine will be ready anytime soon or that opening up in the random way we are doing it will be safe.\u00a0 Hope may run eternal, but it is reality that counts.\u00a0 Here is a story I like to tell.\u00a0 In the early 1980s, I attended a U.S. House of Representative hearing on oil shale production.\u00a0 An industry representative was asked how long it would take to start producing oil.\u00a0 Remember, the country was desperate for domestic supply given the oil embargoes of the seventies.\u00a0 The answer was, if everything goes right, about twelve months (at least that is what I remember).\u00a0 Nearly forty years later, we are still waiting. \u00a0Actually, we no longer care.\u00a0 There is nothing wrong with hoping for the best, but it is always best to plan for the worst.\u00a0 <\/em><\/strong>I am not sure investors are doing that.\u00a0 They seem to be hoping for the best and planning for even better. <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Starts: -30.2%; Year-to-Date: +7.6%; 1-Family: -29.4%; Multi-Family: -40.1%\/ Permits: -20.8%; Year-to-Date: +3.7%; 1-Family: -24.3%; Multi-Family: -14.2% IN A NUTSHELL:  \u201cThe housing market has taken a big hit, but don\u2019t count it out just yet.\u201d WHAT IT MEANS: \u00a0As expected, home construction faltered in April.\u00a0 Multi-family projects were cut back more than single-family, but … Continue reading April Housing Starts and Permits<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1738","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1738"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1738\/revisions"}],"predecessor-version":[{"id":1739,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1738\/revisions\/1739"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}