by Calculated Risk on 8/19/2008 08:30:00 AM

First, the headline number was distorted by a change in the construction code in New York City that was effective July 1, 2008. Many builders filed for permits prior to this deadline, especially for multifamily construction. This boosted both permits and starts in June, and this distortion has been partially unwound in the July numbers.

So the key is to focus on single family starts.

Single-family starts were at 641 thousand in July; the lowest level since January 1991. Single-family permits were at 584 thousand in July, suggesting starts will fall even further next month.

Also employment in residential construction tends to follow completions. Completions will follow starts lower over the next few months. Single-family completions are still at 791 thousand - well above the level of single-family starts.

Click on graph for larger image in new window.

The graph shows total housing starts vs. single family housing starts.

Note that the current recession on the graph is not official.

Here is the Census Bureau reports on housing Permits, Starts and Completions.

Building permits decreased:

Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 937,000.
This is 17.7 percent (±1.3%) below the revised June rate of 1,138,000 and is 32.4 percent (±1.5%) below the revised July 2007 estimate of 1,386,000.

Single-family authorizations in July were at a rate of 584,000; this is 5.2 percent (±1.4%) below the June figure of 616,000. Authorizations of units in buildings with five units or more were at a rate of 318,000 in July.

The declines in single family permits suggest further declines in starts next month.

On housing starts:

Privately-owned housing starts in July were at a seasonally adjusted annual rate of 965,000. This is 11.0 percent (±9.0%) below the
revised June estimate of 1,084,000 and is 29.6 percent (±5.1%) below the revised July 2007 rate of 1,371,000.

Single-family housing starts in July were at a rate of 641,000; this is 2.9 percent (±10.9%)* below the June figure of 660,000. The July rate for units in buildings with five units or more was 309,000.

And on completions:

Privately-owned housing completions in July were at a seasonally adjusted annual rate of 1,035,000. This is 8.7 percent (±10.0%)*
below the revised June estimate of 1,134,000 and is 31.7 percent (±6.6%) below the revised July 2007 rate of 1,515,000.

Single-family housing completions in July were at a rate of 791,000; this is 7.2 percent (±9.3%)* below the June figure of 852,000. The July rate for units in buildings with five units or more was 229,000..

Notice that single-family completions are still significantly higher than single-family starts.