Housing starts and permits usually dominate the headlines on residential construction data day. In September, for example, single-family starts increased a healthy 4.4% (total starts increased 0.3%), and single-family permits rose 0.5% (but total permits declined 5.6%).
Those are certainly important measures, but I also like to look at a third measure of residential activity in the report: the number of single-family houses under construction.
That measure suggests that the housing market has continued to deteriorate in recent months:
The number of single-family homes under construction at the end of September fell to just 269,000, down about 14% from a year ago. I had once hoped that the housing market was putting in a bottom, with homes under construction plateauing at about 300,000. But we’ve now witnessed five straight months of declines.
It’s interesting that these looks cover only a portion of the picture. Housing starts and under construction (WIP) are important, but what about housing completions, average time to complete a house, housing projects abandoned, average value of houses? These also are important for different aspects, and can help tease apart (for example) whether the increase in houses under construction earlier this decade was exaggerated (for example, if increasing starts drove an imbalance of supply/demand for construction that led to increasing time to complete) and how much of an overhand was created by building on spec relative to long-term average needs for new housing (trend line)…
DSM
There was a huge drop – off on the house market for past 2 years. These declines are reflections of buyer’s behaviour. If they are uncertain with their employment we cannot expect they will invest money into accommodations. It seems that the housing reconstruction is probably the only one field that is slightly moving up. Houses are reconstructed to get better conditions because of energy consumption; that is an increasing number in Canadian market. We hope it will have an increasing tendency next year as well…
I also like to look at a third measure of residential activity in the report: the number of single-family houses under construction.
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