Chief Economists Highlight Q1 Housing Start Trends

Kennesaw’s Ashford Capital Partners’ Matthew Riedemann brings you news you can use.

The Commerce Department released first-quarter data this morning for housing starts, permits, and completions including April readings. Jonathan Smoke, chief economist at Hanley Wood, and Brad Hunter, chief economist at Metrostudy offer market insight on the growth in single-family starts and concentration in multifamily construction in 2014 based on government and Metrostudy data.

“Metrostudy’s new field study (350 researchers drive nearly 500,000 miles every 90 days, counting all lots, starts, and units of new-home inventory) is revealing some interesting trends and turning points.  Detached single-family housing starts rose by 5% comparing the first quarter of 2014 with the previous quarter, and were up by 9% compared with a year ago,” highlights Hunter.

Smoke explains the first-quarter data stating, “in the detailed quarterly permit data from the Census, all of the top 15 markets experienced growth in their three-month moving averages. Tampa was the growth leader with a 16% increase, followed by Atlanta at 14%, then Dallas and Charlotte both at 13%. Over half of the volume leaders had double-digit increases for their moving averages with five of those also showing double-digit increases from one year ago. Across all of the top fifteen for year-over-year growth, more than half also saw increases with Orlando leading at 51% over March 2013 and Chicago at 44%. Both of those markets showed a more modest 5% jump in the moving averages but significantly outperformed monthly permits in the prior year. Of the seven markets with decreases, the largest was seen in Phoenix with an 18% drop followed by Raleigh at 14%.”  Housing Trends.

Smoke also highlights continued concentration of multifamily permits with 5% of MSAs making up 80% of permits for the month of March and 7% accounting for 80% of the annual volume for the most recent twelve-month period.


“The data for both single family and multifamily clearly indicate significant market variation and choppiness in activity and the overall recovery cycle, but thanks to improvement in the markets that matter most, growth appears to be the net effect.  I continue to expect that the second quarter data will reveal more positive consistency as spring transitions in to summer,” explains Smoke. “I am expecting a strong second-quarter, in part because I can see that there is real growth occurring in the largest markets, through market level permit data from Census and through Metrostudy field collected starts data. Of 785 MSAs across the country included in the more detailed Census permit data, 484 or 62% demonstrated an increase in monthly single family permit volume for March 2014 over February, which is the third consecutive month with growth.”

Below are top annual volume rankings as of March 2014 by MSA:


In an interview this morning with Bob Moon on Bloomberg Radio, Hunter also noted expected growth in starts this year compared to 2013. “We’re going to see a strong year,” says Hunter. “A lot of the builders increased their prices at a 20% annualized rate in the first half of 2013. Last year builders wanted to slow down their sales based on labor supplies, lot supplies, and production…the market went backwards on them.”

Metrostudy projects an 18% growth in overall housing starts this year. “Remember, by the way, that the surge in apartments is peaking, and many of those renters are going to want to become buyers in the years ahead,” assures Hunter.

Today’s data release for new residential construction is available from the U.S. Census Bureau here.

Learn more about markets featured in this article: Atlanta, GA.

By  May 16, 2014 –