Comments on March Housing Starts
Earlier: Housing Starts increased to 1.319 Million Annual Rate in March
The housing starts report released this morning showed starts were up 1.9% in March compared to February, and starts were up 10.9% year-over-year compared to March 2017.
The increase in starts was mostly due to the volatile multi-family sector.
This first graph shows the month to month comparison between 2018 (blue) and 2017 (red).
Click on graph for larger image.
Starts were up 10.9% in March compared to March 2017.
Note that starts in March, April and May of 2017 were weaker than other months, so this was a fairly easy comparison.
Through three months, starts are up 8.0% year-to-date compared to the same period in 2017.
Single family starts were up 5.2% year-over-year, and down 3.7% compared to February.
Multi-family starts were down 23.7% year-over-year, and up 16.1% compared to February (multi-family is volatile month-to-month).
Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).
These graphs use a 12 month rolling total for NSA starts and completions.
The blue line is for multifamily starts and the red line is for multifamily completions.
The rolling 12 month total for starts (blue line) increased steadily over the last few years – but has turned down recently. Completions (red line) have lagged behind – and completions have caught up to starts (more deliveries).
Completions lag starts by about 12 months, so completions will probably turn down in a year or so.
As I’ve been noting for a few years, the growth in multi-family starts is behind us – multi-family starts peaked in June 2015 (at 510 thousand SAAR).
The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion – so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.
Note the low level of single family starts and completions. The “wide bottom” was what I was forecasting following the recession, and now I expect a few more years of increasing single family starts and completions.