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NJ Homebuilding Has Positive Start to 2015


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

View accompanying chartbook.

Residential construction in New Jersey began 2015 on a positive note as homebuilders drew 1,740 building permits (authorizations to undertake construction) which was just shy (-0.3%) of the best January since 2007. [Charts attached.]

Month-on-Month: After a strong finish to 2014, the total number of permits issued in January fell 10.4%. [Chart 2]

That decline was partially due to severe winter weather, as single-family authorizations were off 9.4%. [Chart 7]

The somewhat larger monthly decline (-11.1%) in multifamily permits was unsurprising given that 2014 saw more attached-housing authorizations than any year since 1973.

Nevertheless, multifamily approvals accounted for 57.4% of January’s total; for all of 2014, they comprised 61.2% of total permits issued. [Charts 1and 4]

Year-on-Year: Compared to January 2014, approvals were up by more than one-quarter (24.5%) due to a modest rise (5.3%) in detached-unit authorizations and a substantial gain (46.3%) over last January’s multifamily approvals.

Adjusted data: Multifamily authorizations tend to be lumpy (i.e., a single action approves a large numbers of units). Single-family approvals, on the other hand, authorize construction of individual units which, like many economic indicators, fluctuate seasonally.

Adjusting for those factors – by using a three-month moving average of seasonally adjusted data – total approvals rose to an average of 2,061 per month in the most recent three-month period. That was 12.5% above the three months through December. [Chart 6]

Since the start of 2014, single-family authorizations have been relatively steady, averaging 876 per month. During that period, the adjusted monthly data fluctuated between a low of 793 units in April and September’s 1,097. [Chart 9]

Single-family approvals, adjusted for seasonal fluctuations, rose marginally (1.2%) in January. [Chart 10]

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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