Today's Focus: May Starts & Permits
As we’ve highlighted, notably steeper comps represented a high hurdle in May and were likely to pressure reported rate-of-change lower even in the face of stable-to-better headline activity.
Indeed, with Total and SF Starts decelerating to -4.7% Y/Y and -12.5% Y/Y, respectively, that dynamic did, in fact, materialize.
Looking across the internals, broader activity was moderately more sanguine than the headline but not overwhelmingly so:
- The sequential decline in Total Starts was exclusively a functional of the solid, positive revision to April where estimates were raised from 1235K to 1281K. At 1269K, Total Starts are tracking +4.9% above the prior 3M and 6M average of 1210K.
- As highlighted above, base effects were the primary driver of the growth deceleration. Comps get notably easier from here across both Total and Single-family, particularly in June where we should see a re-inflection to positive growth.
- SF Permit activity in April softened materially, signaling a prospective deceleration in new SF construction activity amidst more conspicuously emergent macro/growth pressure domestically and globally. However, Permit activity rebounded +3.7% M/M, essentially fully retracing last months decline while tracking right in line with the prior 3-month average.
We contextualized the broader constellation of factors currently impacting the housing market yesterday (see: Builder Confidence | Confidently Equivocal) but, here, suffice it to say that easier comps, together with continued solidity in Permit activity, lower rates and a still tightening labor market should continue to drive stability in new construction activity in the coming month(s).
About Housing Starts & Permits:
The US Census Bureau records the number of new housing units that have obtained permits for construction and those that have begun construction. This data includes new buildings intended primarily as residential units. The US Census Bureau defines a start as, “Start of construction occurs when excavation begins for the footings or foundation of a building.”
