by CalculatedRisk on 9/20/2011
The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.
The rolling 12 month total for starts (blue line) is now above the rolling 12 month for completions (red line), and they are heading in opposite directions (although completions ticked up a little in August).
It is important to note that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment (RI). Still this is bright spot for construction.
Housing Starts and the Unemployment Rate
The following graph shows single family housing starts (through August) and the unemploymentrate (inverted) through August. Note: there are many other factors impacting unemployment, but housing is a key sector.
You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a businessinvestment led recession, and the pattern didn’t hold.
Housing starts have moved sideways for the last two and a half years and this is one of the reasons the unemployment rate has stayed elevated.
With the huge overhang of existing housing units, this key sector hasn’t been participating in the recovery. This is what I expected when I first posted the above graph over two years ago!
- Housing starts drop in August, building permits rise (usatoday.com)