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Feb. 24, 2003: Housing Starts Reach 16-Year High In January

February 24, 2003
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WASHINGTON — Indicating continued momentum in the nation's housing market, builders began work on new homes and apartments at a seasonally adjusted annual rate of 1.85 million units in January, according to U.S. Department of Commerce figures. This marks the fastest pace of housing construction in 16 years, including the best single-family production in 24 years, says the National Association of Home Builders (NAHB).

"Low interest rates and healthy house-price performance remain the most important factors behind the obvious strength that single-family housing has maintained amidst generally weak consumer confidence measures," stated Kent Conine, president of NAHB and a home and apartment builder from Dallas, Texas.

"It would be tough to maintain the super-strong building pace recorded for the past several months," said Conine. "But the market fundamentals remain solid, and the current level of builder optimism regarding the single-family segment reflects that."

New single-family homes were constructed at a seasonally adjusted annual rate of 1.51 million units in January. "This was up 2.1 percent from December's strong number and the fastest production pace since November of 1978. It also is just shy of the fastest construction pace on record — 1.53 million single-family units started in December of 1977," said Conine. Multifamily housing starts declined 7.6 percent to a 340,000-unit rate in January following a big jump in December.

Following a major increase in the previous month, housing permits — a potential indicator of future building activity — declined 5.6 percent to a rate of 1.78 million units in January, which was due entirely to a 23 percent drop on the multifamily side to a rate of 366,000 units, says NAHB. Single-family permits were essentially unchanged at a rate of 1.42 million units.

"Keep in mind that there were significant backlogs of unused permits being held by both multifamily and single-family builders in January," Conine noted. "These could translate to additional starts activity in coming months."

"The bottom line is that housing is holding up very well as we head toward the spring home-buying season," said David Seiders, NAHB's chief economist. "NAHB is projecting another solid year for our industry in 2003, with a gradual leveling off of production activity as the year progresses. Our current forecast calls for 1.65 million housing starts this year, down 3.5 percent from last year's exceptionally strong 1.71 million units."

Publication date: 02/24/2003

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