The housing recovery song is still being sung after the 2008 market crash — one refrain, however, is causing real estate agents and their buyer clients some pain: “Not enough inventory.” Will this months’ new housing starts help change the tune?
Possibly not. Although June new construction starts (as reported by the U.S. Census Bureau and Center for Housing and Urban Development, aka HUD) were above the revised May estimates, they still fell short of last year’s numbers — and short of demand, too.
Last month, building permits authorizing privately-owned housing units were up 1.5 percent from May to a seasonally adjusted annual rate of 1,153,000. However, this rate is down 13.6 percent year-over-year from June 2015’s estimate of 1,334,000.
“While restrictive zoning regulation is often named as public enemy number one, our latest research suggests delays in permit approval better explains why new supply is abundant in some areas and stingy in others,” said Trulia’s Chief Economist Ralph McLaughlin in an emailed statement. “This is because zoning can be changed, while uncertainty over project approval cannot.”
Privately-owned housing starts rose 4.8 percent from May to June, reaching a seasonally adjusted annual rate of 1,189,000. This reflects a 2.0 percent decrease since June 2015’s rate of 1,213,000.
Moreover, single-family housing starts rose 4.4 percent month-over-month to 778,000. Building starts with five units or more had a June rate of 392,000.
“June’s data release shows monthly starts are still about 20 percent below historical averages,” McLaughlin added. “Similarly, our new study finds the rate at which new housing is supplied relative to demand is about 15 percent below historical norms.
“Single-family starts continue on a strong growth trajectory, while multifamily pulls back from what has been a heck of a ride over the past several years.”
And how many privately-owned homes were actually completed?
In June, the seasonally adjusted annual rate for housing completions rose to 1,147,000, up 12.3 percent from May’s revised estimate of 1,021,000 and 18.7 percent from June 2015 (966,000). Completed single-family houses had a rate of 752,000, which is 3.7 percent above the revised May rate of 725,000.
The metrics in the New Residential Construction report measure new, privately owned housing units, excluding manufactured (mobile) homes. The U.S. Census Bureau and HUD collect the data from the Building Permits Survey and from the Survey of Construction, which is partially funded by HUD.
The Building Permits Survey produces estimates of the number of permits issued for new housing units based on a mail survey of a sample of permit offices.
The Survey of Construction produces monthly estimates of housing starts and completions; Census Bureau field representatives sample individual permits within a sample of permit offices and then interview the builders or owners who took out the sampled permits to obtain start and completion date as well as sale dates and characteristics such as size and number of bedrooms. Field representatives also drive roads looking for new residential construction activity in land areas where building permits are not required.