"Builders are trying to stay in sync with housing demand," said Bobby Rayburn, president of the NAHB. "There still is plenty of traffic in the sales offices, but they are also keeping an eye on what Federal Reserve Chairman Alan Greenspan is doing with short-term interest rates."

David Seiders, NAHB's chief economist, noted that it "appears that builders are looking ahead with a little bit of caution. They are having a record sales year, but the number of unsold units in inventory has been on the rise. With the Fed on the move, it makes sense for builders to control inventory at this stage of the cycle.

"There is little doubt we will have another record year for single-family home building in 2004 - up about 6 percent to 1.6 million units," Seiders continued. "Home building overall, which includes construction of new homes and apartments, will increase about 5 percent to 1.95 million units for the year as a whole."

For the month, single-family starts were down to a seasonally adjusted annual rate of 1.448 million units. This was 11.7 percent below the revised October rate and 13.3 percent below the November 2003 pace. The pace of multifamily housing starts decreased 19 percent from October to a seasonally adjusted rate of 323,000 units and was 15.9 percent below the pace of a year ago.

Construction of new homes and apartments slowed in all regions in November. The South declined 10.4 percent for the month. The Northeast posted a 14.2 percent decline, the Midwest was down 19.4 percent, and the West was down 13.2 percent.

Meanwhile, the issuance of new permits for the month was down 1.5 percent to a seasonally adjusted rate of 1.988 million units. As a result, the backlog of unused permits moved up to 204,000 units - a sign that housing starts would probably bounce back in December, according to the NAHB.

Publication date: 12/13/2004