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Housing Starts Decline Further in August
Housing starts declined 6.2% in August to an annual pace of 895,000 units as home builders continued to slow new construction in order to pare down their unsold inventories and help pave the way for a cyclical recovery in the home building industry, according to figures released by the U.S. Commerce Department on Sept. 17.
“Builders understand that there is still a substantial amount of unsold inventory to be worked down, and they continue to do the right thing by reducing production and pulling fewer permits for new homes to help restore better balance between supply and demand,” noted NAHB President Sandy Dunn.
“With help from the new first-time home buyer tax credit and improving interest rates on home mortgages, the long downswing in production activity is slowly but surely putting us back on track to a healthy housing market,” she said.
“Our latest builder surveys have indicated a substantial improvement in builders’ sales expectations for the next six months, in part because of the newly enacted tax credit,” said NAHB Chief Economist David Seiders.
“Meanwhile,” Seiders said, “the government takeover of Fannie Mae and Freddie Mac and the ongoing turmoil on Wall Street actually have produced downward pressures on key home mortgage rates, which should also help get more buyers to the table. But until sales have clearly turned the corner, it’s very important that builders continue the process of pulling in the reins on new production, which is exactly what they are doing and is right in line with our forecast,” he said.
“NAHB continues to project a stabilization of new-home sales in the final quarter of 2008, which should, in turn, allow production to begin a slow and steady recovery by the second quarter of 2009,” Seiders said.
The rate of housing production in August was the slowest since January 1991. Single-family starts fell 1.9% to 630,000 units, while multifamily starts — still evening out after a huge bump in June tied to a New York City building code change — declined 15.1% to 265,000 units.
Two of the nation’s four regions posted double-digit declines in housing starts for August — the Midwest, down 13.6%, and the Northeast, off 14.5%. Starts were down 7.4% in the South but up 10.8% in the West, where they had posted an equivalent decline in July.
Permit issuance, which can be an indicator of future building activity, also fell to a 17-year low in August.
Permits fell 8.9% to a seasonally adjusted annual rate of 854,000 units, with single-family permits dropping 5.1% to 554,000 units and multifamily permits down 15% to 300,000 units.
On a regional basis, permits fell 21% in the Northeast, 9.9% in the South and 7.1% in the West. Permit issuance edged up by 0.7% in the Midwest.
 Attend the NAHB Construction Forecast Conference on Oct. 22
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry.
Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market.
To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 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.
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