WASHINGTON — Nationwide housing starts in September regained the ground they lost in a steep decline the previous month, but issuance of building permits — a key indicator of future building activity — continued on a downward trend, according to statistics released by the U.S. Census Bureau.

September housing starts rose 5.9 percent to a seasonally adjusted annual rate of 1.77 million units, in close alignment with July's 1.76 million-unit rate and the third quarter's average of 1.74 million units. Single-family starts were up 4.3 percent to a rate of 1.43 million units, while multifamily starts were up 12.7 percent to a rate of 346,000 units.

While these numbers "showed that some real strength remains in the national housing market, all of the increase in housing starts was registered in the South and Midwest, where relatively good weather conditions apparently encouraged builders to draw down their backlogs of unused permits. But we believe the trend for housing starts is still downward at this stage of the game, as evidenced by the ongoing slide in issuance of new building permits and the significant decline in the inventory of previously issued permits," noted David Seiders, chief economist for the National Association of Home Builders (NAHB).

Regionally, starts rose 14 percent and 3.4 percent in the South and Midwest, respectively, but fell 14.1 percent and 2.2 percent in the Northeast and West, respectively.

Issuance of total building permits, which can be a good indicator of future building activity, declined 6.3 percent in September to a seasonally adjusted annual rate of 1.62 million units. Single-family permits were down 6 percent to a 1.21 million-unit rate while multifamily permits fell 7 percent to a rate of 412,000. Permits were down 3 percent in the Northeast, 6.9 percent in the Midwest and 9.5 percent in the South, and recorded no change from the previous month in the West.

"Builders are reacting to current market conditions by pulling fewer new permits and instead focusing on their backlogs of existing orders," stated David Pressly, NAHB president. "They're also stepping up incentives to help sweeten the deal for potential buyers. These incentives, together with today's historically favorable interest rates and the broad selection of new homes on the market, all translate to a very good environment for today's housing consumer."

Publication date: 10/16/2006