Washington, August 16 — In line with expectations, the pace of nationwide housing starts slowed 2.7 percent in July to a seasonally adjusted annual rate of 1.65 million units, the Commerce Department reported today. This rate is exactly on pace with the number of starts that the National Association of Home Builders (NAHB) is forecasting for the year as a whole. Meanwhile, permits for new housing construction remained virtually unchanged in July at a 1.7 million-unit rate.
"Builders were finally able to take a breather following the breakneck speed at which they were filling orders in this year's first half," said Gary Garczynski, NAHB president and a builder/developer from Woodbridge, Va. "But I'd caution anyone against linking today's report to some kind of housing 'bubble.' Historically low mortgage rates continue to bring buyers to the market. Moreover, we're forecasting a healthy 1.65 million starts for all of 2002 — the best number in 15 years."
Garczynski said that to hit the NAHB forecast, some slowdown was inevitable from the average 1.69-million-unit pace set in the first two quarters. But this slowing is occurring gradually.
Single-family housing starts declined 2.2 percent to a seasonally adjusted annual rate of 1.32 million units in July. This was only slightly lower than the average 1.33-million-unit rate set in the second quarter. Meanwhile, multifamily starts declined 4.7 percent to a rate of 328,000 units. This compares to a second-quarter average of 337,000 units.
Overall housing starts declined 11.7 percent in the Northeast, while the South and West reported more modest declines of 3.6 percent and 4.3 percent, respectively. As the exception to the rule, the Midwest posted a 5.8 percent gain in housing starts.
Meanwhile, building permits, which can be an indicator of future building activity, rose in three out of four regions in July. The Northeast, Midwest and West posted gains of 3 percent, 1.5 percent and 0.5 percent, respectively, while the South posted a 2.5 percent decline.
"Housing production has been running above last year's healthy pace," said Garczynski. "This is good news for builders as well as for the economy." He noted that NAHB is forecasting 1.32 million single-family housing starts for all of 2002, which would be the largest number since 1978.
EDITOR'S NOTE: Housing is vital to local and state economies, creating jobs and generating taxes and wages that positively influence the quality of life. Find out more about this crucial component of the economy at www.nahb.com/news/housingjobs.htm. Also, NAHB's publication, Housing: The Key to Economic Recovery, explains just how housing has led the economy to recovery. This publication is available free of charge on NAHB's website, at www.NAHB.com/housing_issues.
ABOUT NAHB: The National Association of Home Builders is a Washington-based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the almost 1.6 million new housing units projected for 2002, making housing one of the largest and most powerful engines of economic growth in the country.
Source: National Association of Home Builders