Housing Starts Drop 14.3 Percent in January as Builders Manage Inventories of Unsold Homes
|February 19, 2007|
Total housing starts declined 14.3 percent in January as builders worked down their inventories of unsold homes, according to figures released by the Commerce Department today. The pace of construction for the month slowed to seasonally adjusted annual rate of 1.408 million units. This was 37.8 percent below the January 2006 pace.
“Builders are doing what they should be doing in the market today,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from Playa del Rey, Calif. “NAHB’s surveys of single-family builders have been showing a steady increase in confidence regarding the demand side of the market since last fall, and with sales for new homes stabilizing, builders are working to control their inventories and position themselves for the upcoming spring buying season.”
“Home sales apparently stabilized late last year, but the overhang of unsold housing inventory still is quite heavy,” said NAHB Chief Economist David Seiders. “Builders have been cutting back on starts of new units to bring supply and demand back into balance.”
“We expect housing starts to bottom out in the first quarter of this year before embarking on a gradual recovery path,” Seiders said.
Single-family housing starts decreased 11.2 percent to a seasonally adjusted annual rate of 1.108 million units in January. This was 38.9 percent below the pace of single-family starts a year earlier.
Multifamily housing construction was down 24.1 percent for the month to a seasonally adjusted annual rate of 300,000 units in January. The decrease followed a 34.4% increase in multifamily construction the month before.
Builders decreased the pace of permit issuance by 2.8 percent in January to 1.568 million units, a level that was 28.6 percent below a year ago. Single-family permit issuance was down 4.0 percent to a pace of 1.121 million units for the month. This was 32.6 percent below a year earlier.
The pace of multifamily permit issuance increased 0.4 percent to 447,000 units for the month. This was 15.8 percent below the January 2006 pace.
Regionally, housing starts decreased in three of four regions across the country in January. Construction of new homes and apartments was down 15.2 percent in the Midwest, 11.8 percent in the South and 28.5 percent in the West. Favorable weather patterns in the Northeast in January helped boost starts there by 8.9 percent. All four regions, however, reported a pace of construction well below a year earlier.