Indicating continuing strength in the nation's housing market, home builders began work on new homes and apartments at a seasonally adjusted annual rate of 1.82 million units in August, the Commerce Department reported. This marked a 3.8 percent decline from July's upwardly revised number, which was the highest in 17 years.
Meanwhile, issuance of building permits surged 4.8 percent to its highest level this year, at a 1.89 million-unit rate, and the backlog of unused permits moved up to 179,200 units.
"This is unquestionably a strong report," said Kent Conine, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Dallas. "Builders are clearly reacting to continued strong demand for single-family homes, which is being fueled by historically low interest rates and solid home-price performance. And it looks like there's plenty of momentum for housing heading toward the end of the year."
"The performance of residential building starts and permits through the last two months virtually guarantees another strong contribution from housing to GDP growth for the third quarter," added NAHB Chief Economist David Seiders. "One very positive recent development has been the downward movement of long-term mortgage rates from their highs in early September."
Both single-family and multifamily housing starts receded from their impressive July pace in August. A 4.0 percent decline brought single-family starts to a still-strong 1.48 million-unit rate while a 3.1 percent decline brought multifamily starts to a 344,000-unit pace.
Regionally, starts fell in all but the Midwest, where a 1.0 percent gain was registered. Wet weather in the Northeast likely contributed to a 23.3 percent decline from an exceptionally fast construction pace in that region during the previous month, while the South and West posted more moderate 2.7 percent and 1.8 percent declines, respectively.
Building permits in August rose 4.8 percent to a healthy 1.89 million-unit pace, seasonally adjusted, with single-family building permits rising nearly 3 percent to an all-time record of 1.475 million units. Multifamily building permits posted an impressive 12.3 percent gain to a 411,000-unit rate.
"This report, together with our latest builder surveys revealing very positive expectations for sales heading into 2004, is ample evidence for NAHB to raise its forecast for housing starts this year to 1.76 million units - up about 3 percent from last year's healthy production," said Seiders.