Starts Up, But Permits Still Down in September
Housing starts in September regained the ground they lost in a steep decline during the previous month, but the issuance of building permits — a key indicator of future building activity — continued trending downward, according to statistics released by the U.S. Census Bureau on Oct. 18.
September housing starts rose 5.9% to a seasonally adjusted annual rate of 1.77 million units, in close alignment with July's 1.76 million-unit rate and the third quarter's average of 1.74 million units. Single-family starts climbed 4.3% to a rate of 1.43 million units, while multifamily starts were up 12.7% to a rate of 346,000 units.
"While today's report showed that some real strength remains in the national housing market, all of the increase in housing starts was registered in the South and Midwest, where relatively good weather conditions apparently encouraged builders to draw down their backlogs of unused permits,” said David Seiders, NAHB’s chief economist. “But we believe the trend for housing starts is still downward at this stage of the game, as evidenced by the ongoing slide in issuance of new building permits and the significant decline in the inventory of previously issued permits."
Regionally, starts rose 14% and 3.4% in the South and Midwest, respectively, but fell 14.1% and 2.2% in the Northeast and West.
Issuance of total building permits, which can be a good indicator of future building activity, declined 6.3% in September to a seasonally adjusted annual rate of 1.62 million units. Single-family permits were down 6% to a 1.21 million-unit rate while multifamily permits fell 7% to a rate of 412,000. Permits were down 3% in the Northeast, 6.9% in the Midwest and 9.5% in the South; there was no change from the previous month in the West.
"Builders are reacting to current market conditions by pulling fewer new permits and instead focusing on their backlogs of existing orders," noted NAHB President David Pressly. "They're also stepping up incentives to help sweeten the deal for potential buyers. These incentives, together with today's historically favorable interest rates and the broad selection of new homes on the market, all translate into a very good environment for today's housing consumer."
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