Following historically strong housing production in September, builders slowed the rate at which they began new homes and apartments by 11.4 percent to a still-healthy seasonally adjusted annual rate of 1.6 million units in October, according to Commerce Department figures. But the rate at which new permits were issued continued to move upward, paving the way for stronger housing production in coming months.
"It would be a big mistake to equate today's report with some kind of bubble effect," said Gary Garczynski, president of the National Association of Home Builders (NAHB) and a builder/developer from Woodbridge, VA, U.S. "Builders simply took a breather after a feverish pace of activity in September. While the drop-off was more than expected, single-family housing production remained above the third quarter's robust 1.34 million-unit pace. Moreover, Commerce's report on housing permits sets the stage for increased production in the months ahead." Single-family starts receded 7 percent in October to a 1.35 million-unit pace, while multifamily starts dropped by more than 29 percent to a 253,000-unit rate. Regionally, only the West posted a gain in housing starts, with a 3.6 percent uptick to a 458,000-unit rate. The Northeast, Midwest, and South registered declines of 18.8 percent, 19.5 percent and 14.3 percent, respectively. Mr. Garczynski noted that the backlog of unused permits rose substantially in October, apparently due to builders delaying the start of new projects because of unusually wet weather conditions across all regions but the West. "We wouldn't be surprised to see a bump in starts with a return to normal weather patterns," he said. Newly issued permits were up 1.7 percent to a heady 1.76 million-unit rate in October on a 2 percent gain in the single-family sector and 1 percent rise on the multifamily side. Permits rose in the Midwest, South and West by 1 percent, 3.5 percent and 3.9 percent, respectively, while only the Northeast posted a decline, of 9.6 percent.
"All things considered, the housing market is still in very good shape, and we stand firm in our projection for a healthy 1.68 million housing starts in 2002 - which would be the highest number since the 1.80 million units started in 1986," said NAHB Chief Economist David Seiders. "With prevailing low interest rates on home mortgages, lean inventories, sound house-price performance and our latest survey showing that builders remain very confident about demand for new single-family homes, the fundamentals are all in place for the housing industry's continued good health throughout the remainder of this year and heading into 2003."
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