The U.S. Census Bureau has yet to release the 2018-Q4 housing data, most likely due to the government shutdown. Permits for single-family houses were flat in October and November, around 848,000 each month, which is roughly 35,000 less than the beginning months of 2018. According to the Residential Design Index (RDIndex), new permits and single-family home starts will remain sluggish in the pending December report, as well as continue to be over the next three to four months. The numbers in the Northeast are predicted to continue to decline.
The national RDIndex is 0.61 with the South and Midwest slighting higher at 0.76 and 0.73, respectively. Anytime the index is below 1.0 it’s shown in yellow, and below 0.0 it’s shown in red. Of the four regions, only the Northeast is currently in red with -0.43, which is the first negative index for any of the Census Bureau’s four regions since the index launched in May 2018.
Two indicators provide some hope for the second quarter of 2019. Of the six indicators used to formulate the index, New Client Inquiries and Stock Plan Sales are showing growth over the last 30 days. The Midwest is reporting a considerable uptick in New Client Inquiries (RDIndex = 3.33), in addition to additional hires (RDIndex = 1.11). Inquiries are also up in the South (RDIndex = 1.39) along with Stock Plan Sales (RDIndex = 1.18). But it’s the West dominating in the Stock Plan Sales category with a hardy RDindex of 5.00.
Cancelations are showing an increase for the first time. This is the only indicator that is favorable only when it’s in the negative. Which means, the number of single-family home design contracts canceled in December were greater than those in November. This one index hints to a possible decrease in the soon to be released Census Bureau numbers and could cause concern for subsequent months, as well.
Launched by the American Institute of Building Design’s (AIBD’s) in 2018, the RDIndex is an industry indicator measuring the current workload, backlog, and stock plan sales of AIBD members and non-member Certified Professional Building Designers (CPBDs). Thus, indicating the future activity in the single-family housing industry by surveying the current health and future of residential designs in production, hiring trends and project cancelations or delays. A positive index reflects an increase in new home designs entering into construction estimating, contracting, mortgage and permitting over the next three to six months. A “zero” index indicates no change from the prior month and a negative index means a decrease in new projects entering the next phases over the coming months.