Rising Permits Brighten Residential Construction Outlook

by devteam September 23rd, 2011 | Share

Building permits (charts) were issued in Augustrnat a 3.2 percent higher rate than in July, but housing starts (chart) fell even furtherrnthan expected according to data released Tuesday by the U.S. Department ofrnHousing and Urban Development and the U.S. Census Bureau.</p

Starts of privately owned housing fellrn5.0 percent below the July figure of 601,000 (revised from the originalrnestimate of 603,000) to a seasonally adjusted annual rate of 571,000.  The Census Bureau said this was the largestrndrop since April.  According to Reuters,rneconomists they polled had forecast that starts would fall, but only to arn590,000 unit rate. The August rate is 5.8 percent below the rate of 606,000 onernyear earlier and, according to Reuters, housing starts are now at less than onernthird of their peak during the housing boom. rnThe annual rate of single-family starts was down 1.4 percent from Julyrnto 417,000.  The annual rate for buildingsrnwith five or more units was 148,000.</p

Data on permits was more encouraging for prospects of future constructionrnactivity.  Permits were issued at arnseasonally adjusted annual rate of 620,000 units during the month compared to anrnupwardly revised number of 601,000 units in July.  The July number was originally pegged at 597,000rnunits.  The August figure was 7.8 percentrnabove the estimate of 575,000 units in August 2010.  This was especially good news as economistsrnhad expected permits to fall to a 590,000 unit pace.  Single family authorizations constitutedrn413,000 of the permits, an increase of 2.5 percent from July.  Authorizations for buildings with five orrnmore units were at the rate of 178,000.</p

Housing completions (chart) were at a seasonally adjusted annual rate of 623,000,rn2.7 percent below the revised July number of 640,000 and up from the rate ofrn607,000 one year earlier.</p

On a regional basis, single family starts were down in every region but the Southrnbut multiple family starts kept overall numbers slightly positive in both thernWest and Midwest.  The Northeast stoodrnout with its numbers.  Overall startsrnwere down 29.1 percent from July and single family starts were off 14.6rnpercent.</p

Permitting rose in every region but the South where a drop in multi-familyrnpermits pulled the numbers into slightly negative territory.  Single family permits fell 10.8 percent sincernJuly in the Northeast.</p

At the end of August there were 85,300 permits nationwide that had beenrnissued but where construction had not started, an increase of 6.4 percent sincernJuly.  Multiple family permits representrn37,900 of the backlog and single family permits outstanding number 45,100

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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