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Housing Starts Fall to Lowest Level in 12 Years

September 24, 2007
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WASHINGTON - Housing starts fell 2.6 percent in August to a seasonally adjusted annual rate of 1.331 million units as the downswing in the housing market continued, according to figures released by the U.S. Department of Commerce. Starts were down 19.1 percent from a year earlier, falling to the lowest level in 12 years.

Starts of new single-family homes were down 7.1 percent for the month to a seasonally adjusted annual rate of 988,000 units. The August pace for single-family construction was 27.1 percent below a year earlier.

“Today’s report is very much in line with what builders are reporting in our own surveys - that they are cutting back on new production and focusing on reducing their inventories by offering a variety of incentives to boost sales and limit cancellations,” said Brian Catalde, president of the National Association of Home Builders (NAHB).

“The housing market is still contracting,” said David Seiders, NAHB chief economist, but “action by the Federal Reserve to cut the federal funds and discount rate calmed the financial markets and sent a message to American consumers that our central bank intends to ensure that the economy continues to move ahead. This will help to support housing, especially if the Fed takes further action in the months ahead. We expect starts and permits to bottom out by mid-2008 before a systematic recovery process gets underway.”

Multifamily housing starts increased 12.8 percent to a seasonally adjusted annual rate of 343,000 units for the month. The pace of multifamily construction was 17.9 percent above August 2006.

Total building permits fell 5.9 percent in August to a seasonally adjusted annual pace of 1.307 million units. Total permits were down 24.5 percent from a year earlier.

Single-family permit issuance was down 8.1 percent to a pace of 926,000 units for the month. This was 27.9 percent below a year earlier. The rate of multifamily permit issuance, 381,000 units for the month, equaled the July pace but was 14.6 percent below the August 2006 pace.

Regionally, starts of new homes and apartments were up in the Midwest and South in August by 4.2 percent and 11.4 percent, respectively, because of an increase in multifamily construction. Housing starts were down in the Northeast by 37.7 percent and in the West by 18.4 percent. All four regions reported a pace of construction well below a year earlier.

Publication date: 09/24/2007

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