by Calculated Risk on 5/16/2007 10:50:00 AM

The Census Bureau reports on housing Permits, Starts and Completions. Seasonally adjusted permits declined:

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,429,000. This is 8.9 percent below the revised March rate of 1,569,000 and is 28.1 percent below the revised April 2006 estimate of 1,987,000.

Starts rebounded:

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,528,000. This is 2.5 percent above the revised March estimate of 1,491,000, but is 16.1 percent below the revised April 2006 rate of 1,821,000.

And Completions declined to the level of starts:

Privately-owned housing completions in April were at a seasonally adjusted annual rate of 1,523,000. This is 5.8 percent below the revised March estimate of 1,616,000 and is 26.0 percent below the revised April 2006 rate of
2,058,000.

Click on graph for larger image.
The first graph shows Starts vs. Completions.

As expected, Completions have followed Starts "off the cliff". Completions are now at the level of starts. Starts will probably fall further (based on permits and housing fundamentals) and completions will most likely decline further too.



This graph shows starts, completions and residential construction employment. (starts are shifted 6 months into the future). Completions and residential construction employment were highly correlated, and Completions used to lag Starts by about 6 months.

Both of these relationships have broken down somewhat (although completions have fallen to the level of starts). Why residential construction employment hasn't fallen further is a puzzle. Also the time between start and completion has increased recently.

This report shows builders are still starting too many projects, and that residential construction employment is still too high.