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Single-family housing starts were down 15.9 percent in October to a pace of 1.177 million units while multifamily housing construction dropped 9.1 percent to a rate of 309,000 units.
"Today's report shows that builders have been reacting appropriately to bring supply and demand back into balance following a period where sales were falling, cancellations were rising, and inventories were growing," said David Pressly, president of the National Association of Home Builders (NAHB).
"As builders continue to work off excess inventory, we expect that new housing starts will bottom out by the middle of 2007, with most of the decline occurring this year," said David Seiders, NAHB chief economist. "Meanwhile, economic conditions and results from our recent builder surveys show that the demand side of the market appears to be stabilizing as affordability measures move up. Mortgage rates and energy prices have been declining in recent weeks, applications for new home loans are up, consumer sentiment is rising, and employment and income growth are on the rise."
Regionally, construction of new homes and apartments for the month fell 26.4 percent in the South, 11.7 percent in the Midwest, and 2.1 percent in the West. Starts rose 31 percent in the Northeast, rebounding to a level similar to that reported in August following an unusually low reading in September.
Issuance of total building permits, which can be a harbinger of future housing activity, fell 6.3 percent to a seasonally adjusted annual rate of 1.535 million units. Single-family permit issuance was down 3.8 percent to 1.173 million units while multifamily fell 13.6 percent to a rate of 362,000 units.
"The lower permit figures are actually a good sign," said Pressly. "They show that builders are focusing on working off their existing backlog of inventories in order to balance supply and demand."
Publication date: 11/20/2006