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NJ Homebuilding at 27-Year High


7/28/15

by Patrick J. O'Keefe, Director of Economic Research
 
In June, New Jersey’s homebuilders obtained the largest number of permits (i.e., authorizations to begin construction) since mid-1988. The U.S. Census Bureau reports that a total of 4,792 units were authorized in New Jersey in the most recent month.
 
 
Multifamily approvals (3,776 units) – most of which are slated to be apartments – rose to the highest level of any month from 1980 forward. It was the third consecutive month in which multifamily authorizations reached a historic peak.
 
Single-family authorizations (1,016 units) rebounded from the spring’s slippage, notching the best month since last September.
 
Year-to-date through June, total residential construction permits (16,617 units) were one-fifth (20.1%) greater than 2014’s comparable period. This year’s stronger first-half performance is attributable solely to increased multifamily activity (11,608 units), which substantially outpaced (up 37.2%) 2014’s first six months. Single-family permits through June (5,009 units) lagged last year’s performance by 6.7%.
 
Month-on-month, the total number of permits issued rose 12.1% as multifamily approvals increased 8.3% (after having more than tripled between February and May).
 
Single-family permits surged in June, jumping 28.9% and exceeding 1,000 units for only the fifth month since the start of 2008.
 
Year-on-year, total permit issuance more than doubled (up 111.8%) due to the acceleration in multifamily approvals (which also more than doubled) and a more modest uptick (10.8%) in single-family authorizations.
 
Adjusted data: Multifamily authorizations tend to be lumpy (i.e., an individual approval authorizes 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 – the number of single-family units approved in June jumped sharply (up 33.7%) from May’s adjusted level indicating that builders anticipate that home sales will strengthen in the second half of 2015.
 
Outlook: After the first half’s surge in multifamily approvals, some deceleration appears likely while the gains in single-family authorizations should hold up through the current quarter.
 

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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