In an ongoing effort to pare down inventories of unsold homes, the nation’s builders further reduced new housing production in September, according to numbers reported by the U.S. Commerce Department. Commerce indicated that nationwide housing starts declined 6.3 percent to a seasonally adjusted annual rate of 817,000 units, the slowest building pace since early 1991.
“Builders are doing all they can to bring supply and demand back into balance by limiting new production and offering substantial incentives to prospective buyers,” said National Association of Home Builders (NAHB) Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va. “Unfortunately, the heavy toll that today’s financial-market woes are taking on consumer confidence is a major impediment to getting housing back on track as an engine of economic growth, and additional government help most likely is needed to help stimulate new sales activity.”
“While lower than generally expected, today’s numbers are not surprising in light of our latest builder surveys and evidence of persistently high inventories of new and existing homes, weakening home prices, falling payroll employment and declining consumer sentiment,” noted NAHB Chief Economist David Seiders. “With the impacts of the record-breaking housing contraction now spilling over to other key sectors of the economy and weighing heavily on financial markets, an additional economic stimulus package — including substantial measures to spur home buying and limit foreclosures — is the best chance we have to limit the severity of recession.”
Total housing starts fell 6.3 percent to an 817,000-unit rate in September following a substantial downward revision to the August number. Single-family starts declined 12 percent to a rate of 544,000 units, which is the slowest pace of new-home production since August of 1982. Meanwhile, multifamily starts rose 7.5 percent to 273,000 units, partially offsetting a big decline in the previous month.
Regionally, starts activity was mixed in September. The Northeast and West each posted double-digit declines (of 21 percent and 16.8 percent, respectively), while the Midwest and South each posted modest gains (of 5.6 percent and 0.5 percent, respectively).
Permit issuance, which can be an indicator of future building activity, was down across the board in September. Overall permits fell 8.3 percent to a seasonally adjusted annual rate of 786,000, while single-family permits fell 3.8 percent to 532,000 units and multifamily permits fell 10.3 percent to 273,000 units.
Overall permits were down in three out of four regions in September, with the Midwest, South and West posting declines of 9.8 percent, 9.9 percent and 12.7 percent, respectively. The Northeast, which has experienced greater-than-usual volatility in starts and permits numbers due to a recent building code change in New York City, posted a 13.4 percent gain in September following sharp declines in the two previous months.