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Housing Starts Lose More Ground in August
Total housing starts dropped 6.0% in August to a seasonally adjusted annual rate of 1.665 million units, the Commerce Department reported last Tuesday, leaving home construction down 19.8% below the pace of a year earlier.
Single-family home construction fell 5.9% during the month to 1.360 million units, which was 20.6% below a year earlier. Multifamily housing construction was down 6.7% for the month to a seasonally adjusted annual rate of 305,000 units, 15.7 percent lower than the pace of August 2005.
“Builders have been reporting weakening demand for some time and appropriately are cutting back on new supply in order to meet current market conditions and control their inventories,” said NAHB President David Pressly. “Many builders also are offering substantial incentives to bolster sales and limit cancellations, and with mortgage rates still very favorable, now is a good time to buy.”
“We are in the midst of an inevitable adjustment following the housing boom of 2004 to 2005 when housing market activity soared to unsustainable levels,” said NAHB Chief Economist David Seiders. “The downward adjustment to housing production should run its course by mid-2007. The market that emerges from this correction will display good balance between supply and demand and move to a healthy and sustainable trend based on solid underlying fundamentals.”
“Home buying conditions actually are quite favorable at this time,” Seiders added. “There are a lot of homes on the market, mortgage rates are at historically low levels, house prices are softening in some areas and household income growth is proceeding. These developments are improving the affordability of home buying.”
August housing starts declined 5.5% in the West, 6.1% in the South and 12.2% in the Midwest. They were up 5.4% in the Northeast, following a 12.5% decline during the prior month.
Total building permits last month were issued at a seasonally adjusted annual rate of 1.722 million, a 2.3% decline from July and a 21.9% drop from a year earlier. Single-family permits were down 3.5% to 1.279 million units, while multifamily permits rose 1.1% to 443,000 units.
 Attend the NAHB Construction Forecast Conference
Don't miss NAHB's fall Construction Forecast Conference for the latest economic news about the housing industry. Join NAHB on Oct. 25 for the Construction Forecast Conference — Fall 2006 in Washington, D.C.
If you can't attend in person, sign-up for the Webcast.
To register for either, visit www.nahb.org/cfc.
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.
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