Housing Starts Flat in September
Nationwide housing production remained virtually unchanged in September, edging up half of a percent to a seasonally adjusted annual rate of 590,000 units, according to U.S. Commerce Department figures released on Oct. 20. Meanwhile, issuance of new building permits, an indicator of future construction activity, fell by 1.2% to a seasonally adjusted 573,000 units.
"Builders are being extremely cautious right now in their efforts to maintain a modest inventory of new homes for sale," said NAHB Chairman Joe Robson. "On top of the fact that it is nearly impossible to obtain construction financing for new units, there are widespread concerns about what will happen to demand with the expiration of the $8,000 first-time home buyer tax credit at the end of November,” he said.
"At a time when the national economy and housing market are just embarking on a fragile recovery period, Congress has the ability to keep things moving forward and create much-needed jobs across the country by moving now to expand eligibility for the tax credit to all home buyers and extend the credit's effective date for one year," Robson noted. "Doing so would generate nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues."
"As our latest member surveys have indicated, new-home production is continuing at a very low level with few signs of improvement as builders confront the multiple challenges of a severe credit crunch for builder loans, inappropriate appraisals and the impending expiration of the home buyer tax credit," said NAHB Chief Economist David Crowe.
"In particular,” Crowe said, “the fact that builders are pulling fewer permits right now is an indication of the increasing uncertainty about where this market is headed. Clearly the positive momentum we have seen in the housing market has begun to stall, and congressional action to expand and extend the tax credit may be the only way to keep us from moving back down the hill."
Overall housing starts posted a 0.5% gain to a seasonally adjusted annual rate of 590,000 units in September, returning to a production rate last seen in June. Starts of new single-family homes made up for some of the ground lost in previous months with a nearly 4% gain, to a 501,000-unit rate, while multifamily starts dropped 15.2% to a meager 89,000 units.
Housing starts were down in three out of four regions in September, with the Northeast, Midwest and West posting declines of 11.5%, 6.1% and 10.2%, respectively. The South was the only region where starts increased during September, climbing 7.5%.
Permit issuance slowed by 1.2% to a seasonally adjusted annual rate of 573,000 units in September. Single-family permits dropped 3% to 450,000 units while multifamily permits rose 5.1% to 123,000 units.
Regionally, permits were mixed in September. The Northeast and South posted declines of 3.1% and 1.7%, respectively, while the Midwest was up 1% and the West remained unchanged from the prior month.