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NJ Homebuilding Best Since ‘06


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

View accompanying chartbook.

New Jersey’s homebuilders finished 2014 on a strong note in December, capping a year in which they obtained more building permits (authorizations to undertake construction) than in any year since 2006. 

Year-on-Year: In 2014, a total of 28,199 new units were approved for construction in New Jersey , a year-on-year increase of 16.2%. (Figures for 2014 are preliminary.) 

This was the highest annual total since 2006, when 34,323 units were authorized. And while it was a solid performance, it was well below the long-term average of 36,861 units per year over the period from 1960 through 2006 (i.e., prior to the national housing meltdown). [Charts 1, 4 and 11]

In addition to a multiyear high in total permits issued, the year set an all-time record for the proportion of total approvals (61.2%) that authorized construction of multifamily (i.e., attached) units, which are largely rentals. 2014’s multifamily approvals surpassed 2013’s by 24.4%.

Of the 17,212 newly approved multifamily units, almost two-thirds were authorized in just four North-Jersey counties (Hudson, 25.6%; Bergen, 14.1%; Essex, 13.4%; and Union, 9.1%). Camden county accounted for another 7.6% of the statewide total of multifamily units.

Statewide single-family approvals were 4.5% above 2013’s final tally. [Charts 7 – 5]

Month-on-Month: The total number of residential permits issued in December was 8.8% higher than the November count. Almost all of the gain was due to a 15.9% rise in multifamily authorizations; single family approvals were flat (+0.4%). [Charts 2 and 3]

Adjusted data: Multifamily authorizations tend to be lumpy (i.e., a single action approves a large numbers of units). Single-family approvals (as the title indicates) permit construction of an individual units and, like many economic indicators, vary seasonally. 

Adjusting for those factors – by using a three-month moving average of seasonally adjusted data – total approvals declined in the most recent three-month period. 

Single-family approvals, adjusted for seasonal fluctuations, were off 7.5% in 2014’s final quarter, during which the month data fluctuated between a low of 611 units in October and November’s 1,054. Over the course of 2014, the single-family three-month average exceeded 900 in 10 months. [Charts 9 and 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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