Single-Family Permits in June Down 43% From 2005 Peak
In the latest indication that the nation’s housing market remains in a correction phase, building permits, generally a harbinger of future building activity, were down sharply in June for both single-family and multifamily production, the Commerce Department reported on July 18.
Actual housing starts rose 2.3% in June to a seasonally adjusted annual rate of 1.467 million, but that followed downward revisions for the previous two months and reflected gains solely in the multifamily sector.
"Today's housing report is consistent with what builders have been telling us in our own surveys,” said NAHB President Brian Catalde. “They are dealing with challenging market realities by cutting back on new construction activity, and they are working down their inventories in the face of weak consumer demand by trimming prices and offering other types of incentives to boost sales and limit cancellations."
"The small overall increase in total housing starts does not signal the end of the housing downswing," said NAHB Chief Economist David Seiders. "All of the gain occurred on the multifamily side, which is subject to sizable month-to-month volatility, and single-family starts actually registered a slight decline following downward revisions to both April and May. Looking toward future single-family production, permit authorizations fell to their lowest level since December of 1996 and now stand 43% below the recent peak in the fall of 2005.
"In view of current market challenges, we expect to see further erosion in housing starts during the second half of this year,” Seiders said. “However, we expect to see signs of stabilization by the end of this year and we're projecting a gradual recovery process in 2008."
Starts of new single-family homes slipped 0.2% in June to a seasonally adjusted annual rate of 1.151 million units, 21.6% below a year earlier.
Multifamily housing starts for the month rose 12.5% to a seasonally adjusted annual rate of 316,000, which was 9.7% below their pace in June 2006.
Total building permits fell 7.5% in June to a seasonally adjusted annual pace of 1.406 million units and were down 25.2% from a year earlier.
Single-family permit issuance last month fell 4.1% to 1.019 million units, 27.5% below a year earlier, while multifamily permits declined 15.3% to 387,000 units, which was 18.4% below their year-earlier pace.
Regionally, starts of new homes and apartments in June were up 9% in the West and 2.4% in the South, following sharp declines in May. Starts were down 3.7% in the Midwest and 2.4% in the Northeast. Construction was off substantially in all four regions from a year earlier.
Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
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.