Aug. 16, 2007 - Housing Starts Down 21 Percent
Privately owned housing starts in July were at a seasonally adjusted annual rate of 1,381,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 20.9 percent below the revised July 2006 rate of 1,746,000, and 6.1 percent below the revised June 2007 estimate of 1,470,000.
Single-family housing starts in July were at a rate of 1,070,000, down 7.3 percent from the June figure of 1,154,000. The July rate for units in buildings with five units or more was 275,000.
Privately owned housing completions in July were at a seasonally adjusted annual rate of 1,512,000 - a decline of 22.2 percent from the same period last year. Single-family housing completions in July were at a rate of 1,203,000; this is 4 percent below the June figure of 1,253,000. The July rate for units in buildings with five units or more was 280,000.
Single-family building permits in July were 1,003,000; this is 1.6 percent below the June figure of 1,019,000. Overall, privately owned housing unit building permits had declined 22.6 percent from last year.
In other housing news, highly visible problems in the housing finance system are contributing to a wait-and-see attitude among prospective home buyers and reducing builder confidence in the single-family housing market, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. The index declined two points to 22 in August, its lowest level since January 1991. Any number over 50 indicates that more builders view sales conditions as good than poor.
“Builders realize that issues related to mortgage credit cost and availability have become more acute, filtering some prospective buyers out of the market and prompting others to delay their decision to purchase a new home,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif. “Builders are responding by trimming prices and stepping up non-price incentives to bolster sales and limit cancellations, although we’re dealing in a difficult market environment.”
“There is no question that problems in the subprime mortgage sector have spilled over to other components of housing finance, including the Alt.-A and jumbo markets, delaying a revival of the single-family housing market,” added NAHB Chief Economist David Seiders. “However, the government-related parts of the mortgage market still are functioning well and the underlying economic fundamentals promise to remain solid for some time - providing support to the longer-run housing outlook. We now expect to see home sales return to an upward path by early next year and we expect housing starts to begin a gradual recovery process by mid-2008. From there, the market will have plenty of room to grow in 2009 and beyond.”