Residential Building Sector Strengthens In April 2015

Residential building data is again showing relative strength after the disappointing data from the previous month. The rolling averages are the best metric to view this series – and the rolling averages are now accelerating. This data was above expectations.

 

Be careful in looking at this data set with a microscope as the potential error ranges and backward revisions are significant. Using rolling averages likely is the best way to view this series – and one gets the sense this month that the data is returning to the range we have seen over the last 3 years (after several months of nasty data).

• The unadjusted rate of annual growth for building permits in the last 12 months has been around 10% – it is 8.1% this month.
• Unadjusted 3 month rolling averages for permits (comparing the current averages to the averages one year ago) show that construction completions are lower than permits this month for a change.

3 month Rolling Average for Year-over-Year Growth Unadjusted Data

Unadjusted 3 Month Rolling Average of Year-over-Year Growth – Building Permit (blue line) and Construction Completions (red line)

 

Econintersect Analysis:

• Building permits growth up 0.1% month-over-month, and is up 8.1% year-over-year.
• Single family building permits improved 7.0% year-over-year.
• Construction completions accelerated 28.6% month-over-month, up 19.3% year-over-year.

US Census Headlines:

• building permits up 10.1% month-over-month, up 6.4% year-over-year
• construction completions up 20.4% month-over-month, up 19.4% year-over-year.
• the market expected:

Note that Econintersect analysis herein is based on UNADJUSTED data – not the headline seasonally adjusted data.

When more building permits are issued than residences completed – the industry is expanding – and this expansion was underway for three years (except for the last two months in 2014). In the graph below, any value above zero shows more permits are being issued than completions.