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Homebuilders Slipped on Winter’s Ice


by Patrick J. O'Keefe, Director of Economic Research

View accompanying chartbook.

New Jersey’s homebuilders slipped on February’s unusually severe weather, obtaining the fewest building permits (authorizations to undertake construction) in two years. 

But because of January’s relatively strong permit activity, 2015’s year-to-date approvals were only modestly (-3.5%) below 2014’s comparable period. [Charts attached.]

Month-on-month the total number of permits issued fell by almost one-third (-32.4%), with sharp declines in authorizations of single-family (-25.1%) and multifamily (-27.8%) units. [Chart 2]

Even after adjustment for seasonal fluctuations, the monthly permit total was down substantially (-27.7%), which suggests that February’s severe weather contributed to much of the month-on month decline. [Chart 5]

Year-on-Year homebuilding approvals fell by about one-quarter (-24.2%), with much of the drop attributable to the decline in multifamily permits which accounted for more than three-quarters of the year-on-year drop.

Adjusted data: Multifamily authorizations tend to be lumpy (i.e., individual approvals authorize the construction of numerous units).  On the other hand, single-family permits, which authorize the construction of individual units, fluctuate with weather conditions.

Adjusting for those factors – by using a three-month moving average of seasonally adjusted data – approvals slipped moderately (-6.5%) from January’s level. [Chart 6]

Outlook: Despite the early spate of disruptive weather, homebuilding is expected to accelerate over the remainder of 2015 and turn in its best performance since 2006.

The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither CohnReznick nor the author make any representation or warranty as to the accuracy or completeness of this information. CohnReznick and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.

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