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Housing Starts Off in November, But Permit Inventories Suggest December Rebound Possible
In the face of unusually wet weather across much of the country and further monetary tightening by the Federal Reserve, housing starts dropped 13.1% in November to a seasonally adjusted annual rate of 1.771 million units, the Commerce Department reported last week.
The issuance of new permits for the month was down a slight 1.5% to a seasonably adjusted rate of 1.988 million units, increasing the backlog of unused permits to 204,000 units, a sign that housing starts will probably bounce back in December.
“Builders are trying to stay in sync with housing demand,” said NAHB President Bobby Rayburn. “There still is plenty of traffic in the sales offices, but they are also keeping an eye on what Federal Reserve Chairman Alan Greenspan is doing with short-term interest rates.”
In addition to inclement weather, “it also appears that builders are looking ahead with a little bit of caution,” said NAHB Chief Economist David Seiders. “They are having a record sales year, but the number of unsold units in inventory has been on the rise. With the Fed on the move, it makes sense for builders to control inventory at this stage of the cycle.”
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