Builders Cut Housing Starts Further in December
Single-family housing starts declined 2.9% to a seasonally adjusted annual rate of 794,000 units in December as home builders continued to ratchet down production in an effort to reduce their inventories of new homes, the U.S. Commerce Department reported on Jan. 17.
Meanwhile, a sharp reduction in the volatile multifamily sector contributed to an overall 14.2% decline in nationwide housing starts for the month to a one million-unit rate, the lowest since May of 1991.
“The December numbers for single-family housing starts are right on the money in terms of what we’ve been forecasting and what our members have told us in recent surveys,” said NAHB President Brian Catalde. “Builders are acting appropriately to manage the number of units coming on the market and help restore better balance to the supply-demand equation.”
“The 14.2% decline in overall housing starts for the month of December was due primarily to a 40% drop-off in the multifamily sector, which tends to display significant month-to-month volatility,” noted NAHB Chief Economist David Seiders. “On a quarterly basis, multifamily production actually has held up relatively well since the peak in the early part of 2006.”
Multifamily housing starts declined 40.3% in December to a seasonally adjusted annual rate of 212,000. However, average multifamily starts for the final quarter of 2007 held at 321,000 units, above the averages for each of the previous three quarters.
Overall permit issuance, which can be an indicator of future building activity, declined 8.1% to a seasonally adjusted annual rate of 1.07 million units in December. Single-family permits declined 10.1% to a 692,000-unit rate while multifamily permits were down 4.1% to 376,000 units.
“Builders pulled fewer new permits and continued to work down their inventories of unused permits toward the end of last year,” Seiders noted. “This is all with an eye to repositioning themselves for later this year, when market conditions should warrant an increase in building activity. NAHB’s projected recovery process is contingent upon aggressive monetary stimulus by the Federal Reserve as well as key legislative advances in the areas of FHA reform and GSE oversight reform. A fiscal stimulus package also is warranted to help keep the economy on track in 2008.”
Regionally, combined housing starts were down 3.3% in the South, 19.6% in the West, 25.8% in the Northeast and 30.8% in the Midwest.
Permits fared relatively better, with declines of 7.8% in the South, 10.6% in the Midwest and 11.6% in the West, and a 1.6% increase in the Northeast.
Year-end figures from the Commerce Department showed that overall housing starts declined 24.8% in 2007 to 1.35 million units. Single-family starts declined 28.7% last year to 1.05 million units, while multifamily production fell 8.4% to 308,000 units.
Overall permit issuance for new homes and apartments declined 25.2% in 2007 to 1.38 million units, with a 29.4% decline on the single-family side to 973,000 units and a 12.5% drop in multifamily construction to 403,000 units.
Webcast of NAHB Fall Construction Forecast Available Till Feb. 5
The webcast of the NAHB Fall Construction Forecast Conference held in Washington, D.C. on Oct. 24. is available for purchase through Feb. 5.
The conference webcast includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
Purchasers will receive unlimited access to the webcast archive though Feb. 5, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.
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To purchase the webcast, visit www.nahb.org/cfcwebcast.
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Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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.