Home construction activity bounced back in October from several months of appreciable weakness. It may have been hurricane related where plans and projects delayed by the path of Harvey and Irma were finally cleared to resume. More likely, in my view, it was just the normal variation that the construction figures always have exhibited.
Total permits filed were a seasonally adjusted 1.297 million (annual rate), the highest since January. While that was up from 1.225 million in September, it isn’t statistically different from the 1.272 million in August, the 1.275 million in June, or 1.260 million in March. Just from that quick review of the high points in monthly variation you might get the sense construction is more flat than growing.
That does seem to be the case, as in both permits as well as starts there has been appreciable sluggishness in the sector as a whole. Like everything else, there was a clear downturn in construction at the start of 2016, lasting through much of the year before giving up to a rebound in the second half. And like everything else, that rebound doesn’t appear to have lasted very far into 2017, yielding instead another slowdown if not quite yet full downturn.
The number of single-family houses planned and under construction is still growing but not nearly robust enough to offset other more concerning weakness. We know from resale and new home sale data that the single-family home market is heavily skewed toward the upper price tiers. What are missing in volume terms are new units being built for the lower-end segments.
Without that volume the single family sector as a whole cannot make up for persisting contraction in new multi-family units. Relatedly, apartment activity continues to be down indicating the same imbalance we find in single-family – stratification due to vastly different economic conditions inside the singular US economy.
