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New Residential Construction Data for February 2010
By Craig Grella
The U.S. Census Bureau and the Department of Housing and Urban Development jointly reported statistics for new residential construction in February 2010. The report is a significant one, giving us a glimpse into the life cycle of the residential construction process linking building permits, housing starts, and housing completions. It can be a barometer for new housing demand as well as an indicator of new supply about to hit the market.
A permit is required before building can start. Permits are usually acquired several weeks to several months before building is planned. Housing starts are homes that have actually commenced construction. To start building a home you need supplies and labor, which means the wheels of economy are turning. Finally, completions mean the house previously under construction is now finished and ready to be put on the market. With this number we can estimate the amount of supply or housing stock on the market at any given time. The balance of supply and demand has a direct effect on the value of our homes.
Building Permits
The report showed that privately-owned building permits in February were at a seasonally adjusted annual rate of 612,000, which is slightly lower than January’s figures (1.6 percent below the rate of 622,000 for January 2010), but significantly higher than a year ago (11.3 percent above the February 2009 estimate of 550,000). Single-family authorizations in February were only 0.2 percent below the revised rate for January.
Housing Starts
Privately owned housing starts in February were at a seasonally adjusted annual rate of 575,000, which is higher than they were in January (5.9 percent below the revised January estimate of 611,000), but about the same as they were a year ago (0.2 percent above the February 2009 rate of 574,000). On a slight decline, single-family housing starts in February were at a rate of 499,000, which is 0.6 percent below the revised January figure of 502,000.
Housing Completions
Alternately, privately-owned housing completions were on a slight incline from January to February, with a seasonally adjusted annual rate of 700,000 (5.4 percent above the revised January estimate of 664,000), however they were 15.5 percent below the February 2009 rate of 828,000. Likewise, single-family housing completions in February were at a rate of 458,000, which is 4.3 percent above the revised January rate of 439,000.
Some experts believe the decrease in housing starts and building permits in February is due to the extreme winter storms experienced by most of the East cost, which prevented building for weeks as states struggled to dig themselves out of several feet of snow. While numbers in each category are down over the last month, single family home production has increased when compared to the same period last year, and even though this information is positive economists remain cautiously optimistic for the future health of the housing market.
Photo Credit: LancerE on Flickr
