by Bill McBride on 3/20/2012 10:37:00 AM
Tuesday, March 20, 2012
For a couple of years I've been posting a graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).
This month (second graph) I've added a graph for single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer.
These graphs use a 12 month rolling total for NSA starts and completions.
Click on graph for larger image.
The blue line is for multifamily starts and the red line is for multifamily completions.
The rolling 12 month total for starts (blue line) has been increasing since mid-2010. And completions (red line) are now following starts up.
It is important to emphasize 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).
The blue line is for single family starts and the red line is for single family completions.
In February, the rolling 12 month total for starts is above completions for the first time since May 2006. This usually only happens at a bottom, although the recovery for single family starts will probably remain sluggish.