Builders Rein in Housing Production Further in July
Single-family home builders continued to aggressively manage their inventory in July by slowing the pace of new production nearly 3% to a seasonally adjusted annual rate of 641,000 units, which was the lowest single-family starts rate since January 1991, according to Commerce Department figures released on Aug. 19.
“Though some may be inclined to focus only on the negative aspects of this report, there is definitely a bright side,” said NAHB President Sandy Dunn. “The actions that home builders are taking right now to keep a lid on new production are slowly but surely helping to bring supply and demand back into balance and put us on the road to a much healthier housing market.”
“The single-family numbers in this report are very much in sync with what home builders have been saying in our latest surveys,” noted NAHB Chief Economist David Seiders. “While there is definitely a sense that we are nearing the bottom of the downswing in home sales, builders are not ready to start ratcheting up production just yet — nor should they be, until after sales begin to rebound and the inventory overhang is reduced further,” he said.
“We anticipate that the new first-time home buyer tax credit will help bring about that rebound,” Seiders added, “and NAHB’s forecast projects that the ongoing contraction in housing starts will end in the first quarter of 2009.”
NAHB has developed a Web site at www.federalhousingtaxcredit.com to explain the first-time home buyer tax credit that was implemented as part of the recently enacted Housing and Economic Recovery Act of 2008.
For the second month in a row, overall housing starts and building permit numbers were skewed by a building code change in New York City that caused an unusually large fluctuation in multifamily activity for the Northeast region.
A 23.6% decline in multifamily starts to 324,000 units partially offset a 41% gain in June and contributed to an 11% decline in total housing starts for July dropping the seasonally adjusted annual rate to 965,000 units.
Builders also pulled fewer permits for anticipated new-home construction in July, said the Commerce Department. Single-family permits declined 5.2% for the month to a 584,000-unit rate, the lowest since August 1982. Meanwhile, overall permit issuance and multifamily permit issuance, both heavily affected by the New York City data, declined 17.7% to 937,000 units and 32.4% to 353,000 units, respectively.
Regionally, starts activity was somewhat mixed, with the Midwest posting a 10% gain, the South and West each registering declines of 8.2% and the Northeast tumbling by 30.4% — again due to the skewed numbers from New York City.
Permit issuance was also mixed on a regional basis, with gains of 1.4% in the Midwest and 4.1% in the South and declines of 14.8% in the West and 63.4% in the Northeast, where permits were also affected by New York City data.
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Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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