We had our Best New Construction Year since 2007 during 2018. Was new construction slowed down this year, so far, by the Government Shutdown?
The release economic data regarding new construction and new home sales was delayed due to the the Government Shutdown. We received the January New Construction data on the same day as we received the February Jobs Report. We received the February New Home Sales report March 14th, and the next report will be released this week on March 29th. January and February New Construction data can be impacted by storms and cold weather. It appears that the Government Shutdown chilled, and even froze, loan approvals, and therefore stopped some construction and sales activity right in their tracks. The forecast was for starts, units under constructions, and completions to jump from the January levels and rise from last February’s levels. What was recorded and what was reported for February 2019?
It was thought that we would see 63,000 to 69,000 starts during February.
The single family starts data came in lower than expected at 55,700
units. The total starts data was also a miss with only 81,300
non-seasonally adjusted (NSA) units compared to 85,100 last month and
89,700 during February 2018.
We had the most units under construction for the month of February since February 2007.
It was thought hat we could see 1.2 million to 1.3 million units under
construction. We “missed” on the low side at 1.187 million units under
construction. Single family units improved from 477,500 units February
2018 to 517,100 this February. We also saw an increase in the units
under construction for 2-4 family construction while seeing a drop in
buildings with 5 or more units.
We saw the most February completions since February 2007.
It was thought that completions should improve month to month and
February to February. We are approaching the levels seen during the
mid-1990s. This is actually good news. We do not have to have the level
of units under construction, or completions, that we had during the new
construction boom of 2004-2006. We do need completions in order to see
the “for sale” inventory to rise. It will be interesting to see what is
happening with regard to the not started, started, completed mix of new
home inventory when we receive the February New Home Sales data Friday
The new home construction data was okay.
There was some improvement in completions and units under construction
as compared with last year. The starts data was a little on the light
side. This could be weather related or shutdown related. A delay in
financing may have delayed the starts.
is not a trend. There is considerable hand wringing regarding the new
construction data and the overall economy. It appears that new
construction starts were impacted by the government shutdown. This week
we will receive the second reading on the fourth quarter Gross Domestic
Product (GDP.) It also appears that it may be the “final” fourth
quarter GDP value in advance of next moth’s “Advance First Quarter GDP”
report. It appears that we are going to “strip some gears” shifting from
1st to 3rd. We will receive the March New Construction data in advance
of the GDP report next month, meaning that we will have some more
insight into the Gross Private Domestic Income (GDPI) component of GDP.
We might not have a full handle on the construction sector until the end
of the second quarter, after we have six data points.
It’s the Economy.
Categories: It's the Economy