Volume 8, Issue 11 - December 2007
New Residential Construction Still Down in October
Privately owned housing starts in October were down 16.4 percent from last October, according to the U.S. Commerce Department. The U.S. Census Bureau and Department of Housing and Urban Development estimates that privately owned housing starts in September were at a seasonally adjusted annual rate of 1.23 million units, compared to 1.47 million in October 2006.
Single-family housing starts in October were at a rate of 884,000 units, 7.3 percent below the Sep-tember figure of 954,000 units.
Privately owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1.18 million units, which is 6.6 percent below the revised September rate of 1.26 million and 24.5 percent below the revised October 2006 estimate of 1.56 million.
The Commerce Department also reports that privately owned housing completions in October were at a seasonally adjusted annual rate of 1.44 million—a 1.9-percent increase from the September estimate of 1.41 million and a 25.2-percent drop from the October 2006 rate of 1.92 million.
While building was down, new single-family home sales edged up 1.7 percent, the U.S. Commerce Department reports. “The progressive tightening of mortgage lending conditions during 2007 has been the major factor behind the setback in home sales this year,” says David Seiders, chief economist at the National Association of Home Builders (NAHB). “NAHB expects home sales to begin a gradual recovery in the early part of 2008.”
“For this pattern to materialize, the U.S. economy must avoid recession and conditions in the mortgage finance system must improve. We are looking to the Federal Reserve to implement at least two more cuts in short-term interest rates to ensure that those conditions are met,” Seiders says.
The regional patterns of new-home sales in October were mixed, according to the Commerce Department. New-home sales increased 1.8 percent in the Northeast, 14.2 percent in the Midwest and 6.8 percent in the South. Sales were down by 15.7 percent in the West.