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Plunging Permits Are Another Housing Canary
Housing starts rose far more than expected in the US last month, a development which, frankly, is hard to parse given how rapidly the market is evolving. Or devolving.
The upside surprise was accompanied by a 28% leap in multifamily starts. The rise in new single-family construction was much more subdued.
The 1.575 million annual headline pace topped the highest estimate from five-dozen economists. Revisions to the prior two months were negative. August's 12% gain came on the heels of a double
The other lagging effect which may be going on here is that builders anticipating a downturn may aggressively push starts on completed lots regardless of sale status. Those houses absorb sunk costs (materials and lot development) and provide a revenue cushion when the builders begin cutting lot development and crews as conditions worsen. If history repeats, eventually we’ll see builders selling land and land prices dropping. Hopefully won’t get that far.
UTG. Good observation. That’s what the developer in my subdivision is doing. He is rapidly starting new houses on just about every lot he owns, even though sales of finished houses has clearly slowed. He seems to want to finish all he can and close out his obligations in the next 6-8 months, regardless.
also possibly an overly exuberant short term reflection of July’s relief rally in rates that obviously has lost any and all traction…