Housing Starts Slide Further in May as Correction Continues
In the latest indication that the housing market remains in a correction phase, housing starts fell 2.1% in May to a seasonally adjusted annual rate of 1.474 million units, 24.2% below the pace of a year earlier, the Commerce Department reported on June 19.
“Builders still are cutting back on new production as they work down their inventories in the face of slack home buyer demand,” said NAHB President Brian Catalde. “According to recent NAHB Housing Market Index surveys, they are trimming prices and offering a variety of non-price incentives to boost sales and limit cancellations.”
“The downswing in new housing production is still underway, although the rate of decline has slowed since late last year,” said NAHB Chief Economist David Seiders. “We still expect starts and permits to bottom out late this year before a systematic recovery process begins in 2008.”
Starts of new single-family homes fell 3.4% during the month to a seasonally adjusted annual rate of 1.170 million units, 26% below a year earlier.
Multifamily housing starts, on the other hand, climbed 3.1% in May to a seasonally adjusted annual rate of 304,000 units, which was 16% below the rate of May 2006.
Total building permits increased 3% in May to a seasonally adjusted annual pace of 1.501 million units, reflecting a spike in multifamily permits. Total permits were down 21.7% from a year earlier.
Single-family permit issuance last month was down 1.8% to a pace of 1.056 million units, 27.7% below a year earlier, while multifamily permits rose 16.5% to 445,000 units, which was 2.8% below the annual rate set in May 2006.
Regionally, starts of new homes and apartments in May were up in the Northeast and Midwest by 15.7% and 15.5%, respectively. Starts were down 1.6% in the South and 19.7% in the West. All four parts of the country experienced a construction pace that was well below the level of a year earlier.
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NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into 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.