"We've now had four consecutive months of housing production above the 1.8 million unit pace, and that is truly remarkable," said Kent Conine, president of the National Association of Home Builders (NAHB). "Undoubtedly, last month's fallback in long-term mortgage rates was a contributing factor, as well as strong household formations and the accelerating economy." The average rate on long-term mortgages in September was just over 6 percent.
This report "shows a very healthy housing market that is clearly in high gear heading into the fourth quarter," agreed David Seiders, NAHB's chief economist. "Demographic fundamentals supporting the new homes marketplace are perhaps even stronger than previously estimated. Moreover, our latest builder survey indicates considerable optimism regarding expected sales conditions in the single-family market over the next six months."
Single-family starts rose 3.1 percent in September to a seasonally adjusted annual rate of 1.52 million units, almost entirely offsetting a decline in August following July's peak activity. Multifamily starts rose 4.5 percent to a 368,000-unit rate, the highest since August 2002, when it hit a 381,000 unit rate.
Housing starts rose strongly in all regions except the South in September, where a 1.3 percent decline was recorded. Despite some weather concerns, the Northeast posted a double-digit gain of 15.1 percent, while the Midwest and West posted 8.1 percent and 4.2 percent gains, respectively.
Issuance of building permits for new homes and apartments eased across the board in September, but still held near historically high levels. Total permits fell 2.2 percent to a seasonally adjusted annual rate of 1.86 million units, reflecting a 0.7 percent decline in single-family permits and a 7.4 percent decline in multifamily permits.
The backlog of unused permits edged down in September, but still was 26 percent above its year-earlier level.
"Housing production for 2003 should easily surpass last year's very healthy 1.71 million units and will likely approach the 1.8 million unit mark, a level last seen in 1986," stated Seiders. "Furthermore, single-family starts could equal or surpass the highs of the late 1970s."
Publication date: 10/27/2003