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In yet another sign of a slowing economy, April residential housing construction starts declined for the second straight month in a row. At the same time, the Housing Market Index, a key gauge of homebuilder confidence, collapsed in May.
In new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, residential housing construction starts dropped 1.6% in September as compared to the previous month’s reading. This rate is the lowest level of housing starts in five months. Also concerning, building permits – a leading indicator of future construction – registered a sharp drop, down 7.7% below the previous month.
In yet another sign that the increasing momentum down the path to economic recovery will still be a very bumpy journey, residential housing construction starts (housing starts) in April showed declines in both the overall reading for all types of homes as well as for single-family homes. While both showed double digit declines in the initial report for April, they are both still well over the readings experienced in April 2020, at the height of the rollout of the COVID-19 pandemic.
In new data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, residential construction – housing starts – appear to have taken off in March, rocketing to nearly 15-year highs. This is welcome news, as a serious shortage of available homes has been constraining housing sales recently. An increase in construction will help add inventory for sale. This shortage emerged after a protracted period of sales growth as urban dwellers left over-crowded cities during the time of COVID-19 for more spacious digs in the suburbs.
In the latest government data on new residential construction, housing starts dropped in February by 10.3%. This is the second month-in-a-row that starts dropped, after falling 6% overall in January.
So what do analysts think this downward cycle means? Is the housing construction segment beginning a period of contraction?
It has been quite the roller coaster ride for housing – first dropping a COVID-driven, eye-popping 30.2% in April to just a 934,000 unit seasonally adjusted annual rate. Then gradually rebounding in May and June…leading to a record 22.6% increase in July.
Now we see a bit of a pause in August, with overall housing starts declining 5.1% to a rate of 1,416,000 units, down from the revised rate of 1,492,000 in July.
Two new economic reports from June covering the housing industry show promising results, with both residential construction (otherwise known as housing starts), and sales of newly constructed homes taking a nice bounce in June. This was welcome news after dramatic declines hit the housing market in early Spring.
But will it hold?
Last month, Strata-gee reported on a shocking 30+% drop in residential housing construction, with starts dropping an eye-popping 30.2% in April. That was ultimately revised to a decline of “only” 26.4%…still a massive one month decline. Now in May, we see starts attempting to rebound from those unprecedented drops.
I’ve been saying for a while now that really, really tough economic data was coming. Even though it was obvious to many of us that the economy was crashing – thanks to COVID-19 – it takes time for backward-looking statistics to catch up. Well, now they’re starting to catch up and with overall residential housing construction starts dropping an eye-popping 30.2% in April…they are ugly.
But read on to see why one piece of data seems to suggest that a housing turnaround make be lurking in the near future – or is even already here…
The U.S. Census Bureau and the U.S. Department Housing and Urban Development announced this week that sales of newly built residences fell in February 2020. Housing starts also fell in February. This housing market downturn is likely a precursor to much more dramatic declines when figures for March 2020 are reported – a time period when the coronavirus (COVID-19) pandemic began to really take hold across America, forcing State and City governments across the U.S. to order residents of all non-essential businesses to stay home.
