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August Housing Starts Down Slightly

October 13, 2003
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WASHINGTON - Housing starts were at a seasonally adjusted annual rate of 1.82 million units in August, the U.S. Department of Commerce reported. This marked a 3.8 percent decrease from July's upwardly revised number, which was the highest in 17 years. Meanwhile, issuance of building permits increased 4.8 percent to its highest level this year, a 1.89 million-unit rate.

Referring to August starts as down marginally, National Association of Home Builders' (NAHB's) President Kent Conine stated, "This is unquestionably a strong report.

"Builders are clearly reacting to continued strong demand for single-family homes, which is being fueled by historically low interest rates and solid home-price performance. And it looks like there's plenty of momentum for housing heading toward the end of the year."

"The performance of residential building starts and permits through the last two months virtually guarantees another strong contribution from housing to GDP growth for the third quarter," added David Seiders, NAHB's chief economist.

Both single-family and multifamily housing starts dropped back from their July pace in August. A 4 percent decline brought single-family starts to a still-strong 1.48 million-unit rate, while a 3.1 percent decline brought multifamily starts to a 344,000-unit pace.

Regionally, starts fell in all but the Midwest, where a 1 percent gain was registered. Wet weather in the Northeast is believed to have contributed to a 23.3 percent decline from an exceptionally fast construction pace in that region during the previous month, while the South and West posted more moderate 2.7 percent and 1.8 percent declines, respectively.

Building permits in August rose 4.8 percent to a healthy 1.89 million-unit pace, seasonally adjusted, with single-family building permits rising nearly 3 percent to an all-time record of 1.475 million units. Multifamily building permits posted a 12.3 percent gain to a 411,000-unit rate.

NAHB also pointed out that the backlog of unused permits moved up to 179,200 units.

This housing report, "together with our latest builder surveys revealing very positive expectations for sales heading into 2004, is ample evidence for NAHB to raise its forecast for housing starts this year to 1.76 million units - up about 3 percent from last year's healthy production," noted Seiders.

Publication date: 10/13/2003

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