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Aug. 20, 2003: Housing Starts Hit 17-Year High In July

August 20, 2003
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WASHINGTON — Housing starts ramped up to a seasonally adjusted annual rate of 1.87 million units in July, the U.S. Department of Commerce reported. This is 1.5 percent above June's upwardly revised 1.85 million unit pace and is the strongest rate of housing production since April 1986.

"It's shaping up to be a very busy summer for home builders," stated Kent Conine, president of the National Association of Home Builders (NAHB). "Favorable interest rates, signs of an improving economy, healthy gains in home values, and strong household formations are all fueling demand for new homes, and builders are responding to the times."

David Seiders, NAHB’s chief economist, concurred. "Clearly, low mortgage rates continue to help energize the marketplace despite their recent upward movement, and builder confidence in the market for single-family homes hasn't skipped a beat," he said. "Housing was a strong growth engine for the economy in the first half of the year, and it now appears that housing will provide solid support to the GDP in the third quarter as well."

July's gain in housing starts was entirely on the single-family side, where a nearly 2 percent increase was recorded to a seasonally adjusted annual rate of 1.52 million units. "This is a 25-year high for our industry," commented Conine, noting that the latest construction pace is the strongest since the 1.53 million-unit rate reported in November 1978.

Multifamily housing starts were only slightly less than the previous month, at a seasonally adjusted annual rate of 351,000 units. This was 0.6 percent below June's 353,000 units.

Construction rose in all but one region in July, with the Northeast posting the biggest gain, of 19 percent. The Midwest and South reported moderate gains of 5.7 percent and 5.6 percent, respectively, while the West posted a nearly 14 percent decline following a big run-up in the previous month.

Housing permits, which can be an indicator of future building activity, were essentially level for single-family homes while dropping for the multifamily market. A 0.3 percent decline left single-family permits virtually unchanged at 1.42 million units, seasonally adjusted. Meanwhile, the multifamily sector, which tends to fluctuate more from month to month, posted a 9.8 percent decline to 357,000 permits. Combined, these numbers accounted for an overall decline of 2.4 percent to a rate of 1.78 million permits for the month.

"With an average rate of 1.76 million housing starts for the first seven months of this year and the considerable strength of NAHB's Housing Market Index in August, we're now very likely to beat last year's healthy housing production of 1.7 million units in 2003," Seiders said.

Publication date: 08/18/2003

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