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October 2003

Industry Stats

Home Building Hit 17-Year High in July
Revving into higher gear for a third consecutive month, homebuilders increased the pace of housing starts to a seasonally adjusted annual rate of 1.87 million units in July, the Commerce Department reported recently. This is 1.5 percent above June’s upwardly revised 1.85 million-unit pace and is the strongest rate of housing production since April 1986.

“It’s shaping up to be a very busy summer for homebuilders,” said Kent Conine, president of Atlanta-based National Association of Home Builders (NAHB) and a home and apartment builder from Dallas. “Favorable interest rates, signs of an improving economy, healthy gains in home values and strong household formations are all fueling demand for new homes, and builders are responding to the times.”
NAHB chief economist David Seiders concurred. 

“Clearly, low mortgage rates continue to help energize the marketplace despite their recent upward movement, and builder confidence in the market for single-family homes hasn’t skipped a beat,” he said. “Housing was a strong growth engine for the economy in the first half of the year, and it now appears that housing will provide solid support to the gross domestic product in the third quarter as well.”

July’s gain in housing starts was entirely on the single-family side, where a nearly 2-percent increase was recorded to a seasonally adjusted annual rate of 1.52 million units. “This is a 25-year high for our industry,” said Conine, noting that the latest construction pace is the strongest since the 1.53 million-unit rate reported in November 1978.

Multifamily housing starts continued at a healthy pace in July, with virtually no change from the previous month at a seasonally adjusted annual rate of 351,000 units. This was 0.6 percent below June’s 353,000 units. 

Construction of new homes and apartments rose in all but one region in July, with the Northeast posting the biggest gain, of 19 percent. The Midwest and South reported moderate gains of 5.7 percent and 5.6 percent, respectively, while the West posted a nearly 14-percent decline following a big run-up in the previous month.

Housing permits, which can be an indicator of future building activity, also held at healthy levels in July. A 0.3-percent decline left single-family permits virtually unchanged at 1.42 million units, seasonally adjusted. Meanwhile, the multifamily sector—which tends to fluctuate more from month to month—posted a 9.8 percent decline to 357,000 permits. Combined, these numbers accounted for an overall dip of 2.4 percent to a rate of 1.78 million permits for the month.

Regionally, the permits report was mixed, with the Northeast and West posting gains of 1.3 percent and 2.9 percent, respectively, and the Midwest and South showing declines of 5.3 percent and 4.5 percent, respectively.

“With an average rate of 1.76 million housing starts for the first seven months of this year and the considerable strength of NAHB’s Housing Market Index in August, we’re now very likely to beat last year’s healthy housing production of 1.7 million units in 2003,” Seiders said. 

Source: U.S. Commerce Department

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