Housing Starts Lose Further Ground in September
As builders continued their effort to pare down inventories of unsold homes, new housing production slid 6.3% in September to a seasonally adjusted annual rate of 817,000 units, the most sluggish construction pace since early 1991, the Commerce Department reported on Oct. 17.
The decline was on top of a substantial downward revision in the department’s earlier estimate of housing starts in August.
“Builders are doing all they can to bring supply and demand back into balance by limiting new production and offering substantial incentives to prospective buyers,” said NAHB Chairman Sandy Dunn. “Unfortunately, the heavy toll that today’s financial-market woes are taking on consumer confidence is a major impediment to getting housing back on track as an engine of economic growth, and additional government help most likely is needed to help stimulate new sales activity.”
“While lower than generally expected, September’s numbers are not surprising in light of our latest builder surveys and evidence of persistently high inventories of new and existing homes, weakening home prices, falling payroll employment and declining consumer sentiment,” noted NAHB Chief Economist David Seiders.
“With the impacts of the record-breaking housing contraction now spilling over to other key sectors of the economy and weighing heavily on financial markets, an additional economic stimulus package — including substantial measures to spur home buying and limit foreclosures — is the best chance we have to limit the severity of recession,” he said.
September’s single-family starts declined 12% to a rate of 544,000 units, which is the slowest pace of new-home production since August of 1982. Meanwhile, multifamily starts rose 7.5% to 273,000 units, partially offsetting a big decline in the previous month.
Regionally, starts activity was mixed in September. The Northeast and West each posted double-digit declines — of 21% and 16.8%, respectively — while the Midwest and South saw modest gains, of 5.6% and 0.5%.
Permit issuance, which can be an indicator of future building activity, was down across the board in September. Overall permits fell 8.3% to a seasonally adjusted annual rate of 786,000, while single-family permits dropped 3.8% to 532,000 units and multifamily permits declined 10.3% to 273,000 units.
Overall permits were down in three out of four regions in September, with the Midwest, South and West posting declines of 9.8%, 9.9% and 12.7%, respectively. The Northeast, which has experienced greater-than-usual volatility in starts and permits numbers due to a recent building code change in New York City, saw a 13.4% gain in September following sharp declines in the two previous months.
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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.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.