March Residential Permit Snapshot

Hi everyone, below are permit numbers for the month of March. We intended to get these out sooner but someone (cough, Ramey, cough) found his favorite permit tracking website started breaking permits out by city and went down a rabbit hole from which he is yet to return. We plan to do something with those numbers in a future letter. If you have any suggestions, let us know!

Single Family

For single family homes, the monthly total of 2,804 was 28% higher than the count from a year ago while the trailing 12-month number of 28,454 is just above the average since 2000 (26,214). The monthly number is also above both the 6 and 12-month averages meaning we are still in a rising market when it comes to homebuilding.

On the Wall Street front, XHB (SPDR S&P Homebuilders ETF) has retreated some from its all-time high. Current price is $103.85, slightly below the peak $111.35 on March 28. It’s still above its 200-day moving average but just dipped below its 50-day. Whether this is a blip or the beginning of a downtrend is yet to be seen.

Multifamily

Multifamily permits clocked in at 1,409, which was less than half the monthly count from a year ago. The trailing12-month count came in at 19,220, a retreat from the November ‘23 peak of 22,906 but 2.3x the long-term average of 8,463. That long-term average broken down into a monthly would be 705 permits. So even at this lower monthly, we’re still well above the historical norm.

The FTSE NAREIT Equity Apartments Index has now surpassed the recent high from 12/28/23 mentioned in our previous letter. It closed at $430.06 on April 9th and $431.40 yesterday April 29th. In addition, it’s above both its 50 & 200-day moving averages, with the 50-day crossing above the 200-day, which is typically a bullish signal.

Combined

The combined trailing 12-month permit count rose 9.92% over the previous year but declined 2.3% from last month. The increase in single family permits was offset by the decrease in multifamily. With the single-family count hovering around its long-term average, the well above average combined count be attributed to the still elevated multifamily numbers.

Thanks for reading, as always, please reach out with anything we can help you with.

Thanks,

John & Ramey