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Starts, Permits Decline in October
Housing starts and the issuance of building permits — a key indicator of future building activity — both were down in October as builders moved on a backlog of inventory to bring housing demand and supply more in balance, according to figures released by the U.S. Census Bureau Nov. 17.
Housing starts were down 14.6% to a seasonally adjusted annual rate of 1.486 million units for the month and the issuance of total building fell 6.3% to a seasonally adjusted annual rate of 1.535 million units. The pace of construction was 27.4% below a year ago.
“Today’s report shows that builders have been reacting appropriately to bring supply and demand back into balance following a period where sales were falling, cancellations were rising and inventories were growing,” said NAHB President David Pressly.
“As builders continue to work off excess inventory, we expect that new housing starts will bottom out by the middle of 2007, with most of the decline occurring this year,” said NAHB Chief Economist David Seiders.
“Economic conditions and results from our recent builder surveys show that the demand side of the market appears to be stabilizing as affordability measures move up,” Seiders continued. ”Mortgage rates and energy prices have been declining in recent weeks, applications for new home loans are up, consumer sentiment is rising and employment and income growth are on the rise.”
Single-family housing starts were down 15.9% to a pace of 1.177 million units while multfamily housing construction dropped 9.1% to a rate of 309,000 units.
Regionally, construction of new homes and apartments for the month fell 26.4% in the South, 11.7% in the Midwest and 2.1% in the West. Starts rose 31% in the Northeast, rebounding to a level similar to that reported in August following an unusually low reading in September.
Single-family permit issuance was down 3.8% to 1.173 million units while multifamily units fell 13.6% to a rate of 362,000 units.
“The lower permit figures are actually a good sign,” said Pressly. “Builders are also continuing to offer value-added incentives to purchase a new home. Factor in today’s low interest rates, competitive prices and great selection and it all adds up to a very good environment for housing consumers.”
 Want to Know the Housing Starts Through 2015?
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.
 NAHB Kit Gives Builders Back-to-Basics Tips in Changing Market
With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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