Housing Starts Highest In 25 Years

January 31, 2004
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WASHINGTON - Total housing starts for 2003 increased to 1,848,000 units, the highest in 25 years, the U.S. Department of Commerce reported. This was 8.4 percent above the number of starts for 2002. For December, home builders ramped up the pace of housing starts to a seasonally adjusted annual rate of 2,088,000 units, a 1.7 percent increase over November's revised estimate of 2.07 million units.

"Builders completed an extraordinary year and remain upbeat about the strength of the market for the year ahead," said Kent Conine, president of the National Association of Home Builders (NAHB). "Builders continue to meet a robust demand fueled by low interest rates and solid house-price performance."

Single-family starts increased 13.6 percent over the year before to a seasonally adjusted annual rate of 1,664,000 units. This was 0.6 percent below the all-time high in November. The seasonally adjusted rate for multifamily housing in December was 424,000 units, 20.1 percent above the pace of a year ago and 11.6 percent above November's pace.

"The strength in housing in 2003 was concentrated in single-family unit starts, while condominium units in multifamily structures gained ground as the year progressed," said David Seiders, NAHB's chief economist. "As a result, the homeownership rate rose to record levels in 2003."

The pace of construction of new homes and apartments was mixed across all regions in December, with decreases posted in the Northeast and Midwest, while the South and West posted gains. For the year as a whole, the Northeast, Midwest, South, and West were up 3.8 percent, 6.6 percent, 7.2 percent, and 13.9 percent respectively.

For the month, issuance of total building permits was up 3.3 percent from November to a seasonally adjusted rate of 1,924,000 units. Single-family permit issuance increased by 2.8 percent and multifamily permit issuance was up 5.1 percent from the November pace.

"The anticipated decline [in housing starts] in 2004 is predicated on a projected rise of mortgage rates as the year progresses, to 6.5 percent by year end," Seiders noted. "However, interest rates are now lower than had been expected, and the rates may move up less than projected in the months ahead. Thus, the risks to NAHB's housing forecast for 2004 are mainly on the upside, and there is a possibility 2004 could even surpass the excellent performance of 2003."

Publication date: 02/02/2004

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