Housing starts somewhat above consensus; permits below consensus

By Paul Quinn, RBC Analyst
RBC Capital Markets
December 20, 2022
Category: Finance & Economics
Region: Canada, United States

The US Census Bureau released new residential construction statistics for November. Housing starts were somewhat above expectations at 1,427k SAAR (vs. consensus at 1,400k SAAR), while housing permits were below expectations at 1,342k SAAR (vs. consensus at 1,480k). Single-family starts of 828k were down 4.1% m/m, while multi-family starts (five units or more) of 584k were up 4.8% m/m. Home builder confidence decreased for the twelfth consecutive month to 31 (a two point decrease m/m) as the slowdown continues amid elevated interest rates. Highlights include:

November U.S. housing starts of 1,427k (SAAR) were somewhat above consensus at 1,400k (SAAR) — Total starts were down 16.4% y/y and down 0.5% m/m from the revised October figure of 1,434k (revised up from 1,425k SAAR). In November, single-family starts were down 32.1% y/y and represented 58.0% of total starts (vs. 70.4% in 2021). The lower proportion of single-family new residential construction is significant since single-family housing starts typically consume 3x the amount of wood products vs. multi-family starts. On a regional basis, the South represented 55.2% of total starts vs. 23.9% in the West, 15.1% in the Midwest and 5.8% in the Northeast. On a y/y basis, starts were down 16.7% y/y in the South, down 20.7% y/y in the West, down 0.5% y/y in the Midwest, and down 27.2% y/y in the Northeast.

U.S. housing permits of 1,342k (SAAR) were below consensus at 1,480k (SAAR) — Total permits were down 22.4% y/y and down 11.2% m/m from the revised October figure of 1,512k (revised down from 1,526k SAAR). Single-family permits of 781k were down 29.7% y/y and down 7.1% m/m, while multi-family permits of 561k were down 9.2% y/y and down 16.4% m/m. Single-family permits represented 58.2% of total permits.

U.S. housing completions were up m/m — November completions of 1,490k (SAAR) were up 6.0% y/y and up 10.8% m/m from the revised October figure of 1,345k (revised up from 1,339k SAAR). Single-family completions of 1,047k (SAAR) were up 9.9% y/y and up 9.5% m/m, while multi-family completions of 430k (SAAR) were down 3.2% y/y but up 15.9% m/m. Single-family completions represented 70.3% of total housing completions.

Building Material sales were down m/m — According to the US Census Bureau, category advance retail sales were $42.5B in November, which was down 2.5% m/m but up 3.6% y/y. We highlight that November 2022 sales were 35.9% above November 2019 levels.

Canadian housing starts were above expectations — According to the CMHC, Canadian housing starts (SAAR) of 264k units in November were above FactSet consensus of 253k units. Total starts were down 0.2% m/m from October at 265k units. In urban areas, single-family starts were down 6.7% m/m, while multi-family starts were up 1.7% m/m.

Read More