Big Apple Bounce

It's been widely reported that US housing starts "surged" - rising 9.1 percent in June - after many months of decline and turmoil.  The seasonally adjusted rate of more than 1 million homes was seen to be a significant turnaround over a 2.7 percent decline in May.  Behind this shift was one anomaly - an extraordinary run-up in building permits in New York City before July 1st, when the city will enact new building codes as both the New York Times and Wall Street Journal report.  The Journal summarized it this way: "The gain was driven by soaring apartment construction, which was related to the New York building-rules change. Aside from the boost given by the building-regulation change, U.S. housing starts fell 4% in June." More evidence of the very differeent housing markets separating global real estate superstars from rustbelt regions, ex-urbs and overbuilt resort markets.

Comments

[ckstevenson]

I don't follow your last sentence. NY permits (not actual starts) were up solely due to an impending legal change. How does this show the difference between the various types of areas you cite?

Wait till you see July and August's numbers in NY, they'll be down more than they would have because there was a glut of "starts" in June.

[hayden fisher]

Great catch!!

[Whitney Gunderson]

I don't get it. So one report says housing starts were up 9% in June, and another report says they were actually down 4%.... and there's a story that says the increase is due to apartment starts in New York. This must be the kind of data that lead to the housing price bubble in the first place.

[Michael Wells]

I wonder, if those permits lead to actual construction, if this will help make NYC housing more available and affordable. The article doesn't say if these are all high end condos or include middle or low income apartments. This could be a good thing.

In terms of the statistics, the WSJ story suggests that NYC is oversampled or used as one of a few test markets and so its influence is exaggerated. It seems unlikely that there were permits for 123,000 new units in New York, which would be the number needed to make the difference otherwise.