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With builders pulling back on the production of new homes amidst a growing number of concerns, figures released by the U.S. Commerce Department on March 16 showed disappointing declines in February in nationwide housing starts and the issuance of permits for new housing construction.
Total housing starts declined 22.5% from January to a seasonally adjusted annual rate of 479,000 units, the second-slowest pace on record.
Equally disconcerting, total permit issuance for new homes fell 8.2% to a record low pace of 517,000 units in February.
"The decline in new construction and permits in February is the culmination of a great deal of nervousness that both builders and consumers are feeling right now," said NAHB Chairman Bob Nielsen.
"In an already fragile market where credit for building and buying homes remains extremely tight, additional concerns about energy costs, interest rates and other factors are contributing to an atmosphere in which many have adopted a very cautious stance," Nielsen said.
"While our latest member surveys showed a slight uptick in expectations for the future, there are just too many uncertainties out there for most builders and buyers to comfortably move forward with a new-home project at this time," said NAHB Chief Economist David Crowe.
"We need to see several months of consistent improvement in economic factors, plus concrete signs that the flow of credit to housing is improving, in order for the industry to return to a steady recovery and facilitate job growth," he said.
February’s housing start declines were broad-based, reaching to every sector and region of the country.
Single-family starts in February declined 11.8% to a seasonally adjusted annual rate of 375,000 units.
Multifamily starts — which tend to display greater volatility on a month-to-month basis — fell 46.1% to a rate of a yearly pace of 104,000 units.
Starts were down 37.5% in the Northeast, 48.6% in the Midwest, 6.3% in the South and 28% in the West.
Declines in permit issuance were also widespread in February.
Single-family permits dropped 9.3% to 382,000 units, while multifamily permits declined 4.9% to 135,000 units.
Regionally, permits fell 27.8% in the Northeast, 5.4% in the Midwest, 1.4% in the South and 13.6% in the West.
The NAHB Spring Construction Forecast Webinar will provide attendees with up-to-the-minute analysis of the latest housing numbers and market trends right to their desktop. The webinar will be held from 2:00-4:00 p.m. EDT on Wednesday, April 27.
Speakers David Crowe, NAHB chief economist; Mark Zandi, chief economist with Moody's Analytics; and Robert Denk, NAHB’s assistant vice president for forecasting and analysis, will address issues affecting the housing industry and the economy — including competition from short sales and foreclosures, consumers' inability to sell their existing homes, appraisals coming in below construction costs, and restrictive lending conditions for buyers and builders — and how builder confidence and the market may evolve as those factors change.
The fee is $29.95 for NAHB members and home builders associations and $49.95 for non-members.
For more information and to register, visit www.nahb.org/cfw.
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