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2005 Another Record Year for Single-Family Starts
Despite an anticipated year-end slowdown, U.S. home builders set a new record for single-family housing production in 2005, according to figures reported by the Commerce Department last week.
“All in all, 2005 will be remembered as a superb year for the housing industry, thanks to highly favorable interest rates and the strong buyer demand they helped spur,” said NAHB President David Pressly.
“Total U.S. housing starts for the year 2005 topped 2.06 million units, which is up 5.6% from 2004 and the second-highest starts number on record following 1972’s 2.36 million units,” said NAHB Chief Economist David Seiders. “On the single-family side, starts hit 1.71 million units for all of 2005. This is up 6.4% from 2004 and the best pace ever recorded. It’s also the third consecutive time that single-family starts have broken the annual record.”
In December, total housing starts declined 8.9% to a 1.93 million-unit seasonally adjusted annual rate. Single-family starts moved down 12.3%, compared to an increase in multifamily production of just over 10%.
“This report is an indication that the market is returning to a healthy and more sustainable pace, and is in line with what our builder surveys have been telling us,” said Seiders. “Also, some shifts in weather conditions contributed to the December decline. Looking ahead, our forecast indicates that starts activity could regain some ground in coming months as long-term mortgage rates ease from late-2005 levels. ”
Starts declined in three out of four regions in December, with only the South reporting a gain, of 5.2%. The Northeast, Midwest and West charted double-digit declines of 14%, 23.6% and 21.7%, respectively, in part because of unusual swings in weather conditions.
Building permits, which can be an indicator of future building activity, declined 4.4% overall in December, remaining just above a seasonally adjusted annual pace of 2 million units. Permits were down 5% on the single-family side and 1.8% for multifamily units.
“It’s worth noting that the supply of permits that have been issued but not yet used for new single-family homes was up in the month of December,” said Seiders. “This could foreshadow a bit of a rebound in starts activity in the month ahead.”
For 2006 as a whole, NAHB is forecasting a 6.5% decline in national housing starts to approximately 1.93 million units.
Want to Know the Housing Starts Through 2014?
Find out in HousingEconomics.com’s Long-Term Forecast. HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more. To learn more, visit www.housingeconomics.com.
Give Your Perspective on the New NAHB Economics Blog
Give your economic perspective on NAHB's new economics blog, “Seiders on Housing,” launched earlier this month. "Seiders on Housing" is an informal Internet-based discussion forum dealing with topical economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to NAHB Chief Economist David Seiders' expert opinions, projections and responses.
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