PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Housing Data: Positive Trends in Permits and Starts

By at 19 November, 2019, 9:22 pm

by Raymond J. Keating-

The latest housing report from the U.S. Census Bureau pointed to a bounce back in housing starts for October, and a positive stretch in both housing starts and permits since earlier this year.

On housing starts (seasonally adjust annual rate), it was noted:

“Privately‐owned housing starts in October were at a seasonally adjusted annual rate of 1,314,000. This is 3.8 percent (±8.7 percent) above the revised September estimate of 1,266,000 and is 8.5 percent (±10.8 percent) above the October 2018 rate of 1,211,000.”

While housing starts still fall short of the healthy levels achieved before the Great Recession, the movement since the start of 2019 has been positive. Housing starts fell from May 2018 to February 2019, and have generally (this data tends to be volatile month to month) been moving positively since.

Source: Federal Reserve Bank of St. Louis, FRED

On building permits – a gauge for future housing construction – the Census Bureau reported:

“Privately‐owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,461,000. This is 5.0 percent (±1.7 percent) above the revised September rate of 1,391,000 and is 14.1 percent (±2.1 percent) above the October 2018 rate of 1,281,000.”  In particular, building permits have moved up strongly since June 2019.

Source: Federal Reserve Bank of St. Louis, FRED

The recent trends on both starts and permits – plus the increase (the first move up since the fourth quarter 2017) in private residential investment in the third quarter GDP numbers – are all positive signs for housing. That, in turn, is good news for the small businesses that dominate the housing sector, with 97.4 percent of employer firms in the residential building construction industry having fewer than 20 employees.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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