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Nationwide housing starts declined 11.7% to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department on Nov 17. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5% to an 83,000-unit rate, while single-family starts posted a more modest 1.1% decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said NAHB Chairman Bob Jones. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer.”
Crowe added that “builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
Starts activity was mixed across the nation in October, with gains of 12.9% and 1% reported in the Northeast and Midwest, respectively, and declines of 13.4% and 30.5% in the South and West.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5% gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, which rose by 1.0% and 0.7%, respectively.
Regionally, permit activity was unchanged in the Northeast, climbed 14.3% in the Midwest and declined 3.4% in the South and 0.9% in the West.
Housing and economics followers can get the latest economics and housing policy news, analysis, studies, charts and graphs from NAHB’s free new blog, “Eye on Housing,” at http://eyeonhousing.wordpress.com/.
Featuring NAHB Chief Economist David Crowe, as well as observations and comments from NAHB economists Bernie Markstein, Paul Emrath, Robert Dietz, Peter Grist and Robert Denk, the blog also includes links to relevant housing stories and information from other news sources.
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Find out in HousingEconomic.com’s State Starts Forecast (sample).
The forecasts include downloadable Excel tables of total, single-family and multifamily starts by region and state.
To learn more, visit www.housingeconomics.com.