Builders began work on new homes and apartments at a seasonally adjusted annual rate of 1.89 million units in September, the Commerce Department reported. This was up 3.4 percent from August and a clear sign of housing’s continuing solid momentum.
“We’ve now had four consecutive months of housing production above the 1.8 million-unit pace, and that is truly remarkable,” said Kent Conine, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Dallas. “Undoubtedly, last month’s fallback in long-term mortgage rates was a contributing factor, as well as strong household formations and the accelerating economy.” The average rate on long-term mortgages in September was just over 6 percent.
“Today’s report shows a very healthy housing market that is clearly in high gear heading into the fourth quarter,” agreed NAHB Chief Economist David Seiders. “Demographic fundamentals supporting the new-homes marketplace are perhaps even stronger than previously estimated. Moreover, our latest builder survey indicates considerable optimism regarding expected sales conditions in the single-family market over the next six months.”
Single-family starts rose 3.1 percent in September to a seasonally adjusted annual rate of 1.52 million units, almost entirely offsetting a decline in August following July’s peak activity. Multifamily starts rose 4.5 percent to a 368,000-unit rate, their highest since August of 2002, when they hit a 381,000-unit rate. Overall housing starts rose strongly in all regions except the South in September, where a 1.3 percent decline was recorded. Despite some weather concerns, the Northeast posted a double-digit gain of 15.1 percent in the month while the Midwest and West posted 8.1 percent and 4.2 percent gains, respectively.
Issuance of building permits for new homes and apartments eased across the board in September, but still held near historically high levels. Total permits fell 2.2 percent to a seasonally adjusted annual rate of 1.86 million units on a 0.7 percent decline in single-family permits and a 7.4 percent decline in multifamily permits. The backlog of unused permits edged down in September, but still was 26 percent above its year-earlier level.
“Housing production for 2003 should easily surpass last year’s very healthy 1.71 million units and will likely approach the 1.8 million-unit mark, a level last seen in 1986,” said Seiders. “Furthermore, single-family starts could equal or surpass the highs of the late 1970s.”