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Jan. 20, 2005: Single-Family Housing Starts Set Record In 2004

January 20, 2005
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WASHINGTON - Following a decline associated with unusually wet weather in November, housing starts bounced back in December, bringing single-family housing starts to a record annual level in 2004.

Housing starts in December climbed 10.9 percent to a seasonally adjusted annual rate of 2.004 million, according to U.S. Department of Commerce statistics. A total of 1.953 million housing units were started in 2004, up 5.7 percent from 1.848 million starts in 2003.

"The nation's home builders continue to move forward to meet the strong housing demand that has characterized the marketplace for some time, and we are confident that 2005 will be another excellent year for housing," stated David Wilson, president of the National Association of Home Builders (NAHB).

Wilson noted that the industry was helped last year by persistently low mortgage interest rates, and he said that ongoing gains this year in jobs and household income should help offset the slow but steady rise in mortgage interest rates that is anticipated as a result of Federal Reserve policy. "We are geared up for another big housing year," Wilson said, "although we don't expect to be building at quite the break-neck pace of 2004."

Single-family housing production was up 13.1 percent in December to an annual rate of 1.678 million units, the second strongest monthly pace for all of 2004. The 1.608 million single-family homes started in 2004, an all-time high, was 7.3 percent above the 1.499 million single-family units started in 2003.

Multifamily housing starts were up 0.6 percent in December, at a seasonally adjusted annual rate of 326,000; they were down 1 percent for the year, slipping to 345,000 units from 349,000 units in 2003.

"Home building in December was absolutely solid, finishing up the year nicely after some softening in November that was related to bad weather," said David Seiders, chief economist of NAHB. "The level of unused building permits moved up last month, and that is a favorable sign for starts activity as we move forward this year."

Seiders said he expected to see a modest decline, of roughly 3 percent to 4 percent, in housing starts this year as a result of higher mortgage rates, which are projected to average about 6.3 percent on fixed-rate loans, up from 5.8 percent last year.

Regionally, December starts were up 18.8 percent in the Midwest, 10.6 percent in the South, 7.9 percent in the West, and 5.7 percent in the Northeast.

For the year, starts were up 9.2 percent in the West, 8.3 percent in the South, and 6.6 percent in the Northeast; they declined 4.8 percent in the Midwest, primarily reflecting a falloff in multifamily production.

Publication date: 01/17/2005

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