Residential real estate building permits increased month over month but decreased slightly year over year in April, according to the latest Residential Construction Report [1] from the Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. Privately owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,296,000, 0.6 percent above the revised March rate of 1,288,000, but is 5.0 percent below the April 2018 rate of 1,364,000. Additionally, single‐family authorizations in April were at a rate of 782,000, 4.2 percent below the revised March figure of 816,000.
Housing starts rose month over month and fell year over year as well, sitting at a seasonally adjusted annual rate of 1,235,000 in April. This is 5.7 percent above the revised March estimate of 1,168,000, but is 2.5 percent below the April 2018 rate of 1,267,000.
Housing completions, conversely, saw a month over month decrease and a year over year increase. Completions in April were at a seasonally adjusted annual rate of 1,312,000, 1.4 percent below the revised March estimate of 1,331,000, but is 5.5 percent above the April 2018 rate of 1,244,000.
As construction permits increased, builders have reported increased confidence, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index [2] (HMI). The Index reports that builder confidence is at its highest level since October 2018 after declines in late 2018 due to higher interest rates and concerns over slower growth.
The NAHB’s Index notes that affordability problems still persist. Additionally, builders are facing an ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability. The lower interest rate environment, with mortgage rates sitting at around just above 4 percent, may contribute to gradual improvement in the marketplace.
Construction has been on the rise overall, and March saw a 4.5% increase in new single-family home sales month over month, according to the last HUD/Census Bureau New Home Sales report. According to the report, March 2019’s seasonally adjusted annual rate of 692,000 new home sales is above February’s 662,000, and is 3.0% above the March 2018 estimate of 672,000.