Housing Starts Up in November, Permits Continue Moderate Decline
Dec 21, 2006
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Unseasonably warm November weather helped boost total housing starts 6.7 percent to a seasonally adjusted annual rate of 1.588 million units for the month, according to figures released by the Commerce Department. But builders reduced the pace of permit issuance another 3.0 percent in November to 1.506 million units, a level that was 31.3 percent below a year ago.
November’s rise in housing starts followed a 13.8 percent drop in October when weather conditions were unusually harsh. On a year-over-year basis, total housing starts were down 25.5 percent in November.
“Builders are acutely aware of the large inventory of unsold homes that overhangs the market. While they believe that home buyer demand has stabilized, builders continue to be cautious,” said David Pressly, president of the National Association of Home Builders (NAHB). “The ongoing drop in permits shows that builders are keeping a close eye on market conditions and working to control their inventories.”
“It is always difficult to seasonally adjust housing starts this time of year because of volatile weather conditions, and the pattern of permit issuance is a better indicator of trends in the market,” said NAHB Chief Economist David Seiders. “In this regard, it’s clear that the November bounce in housing starts drew down unused permits in the hands of builders. At the same time, the issuance of new permits declined for the month.”
Regionally, housing starts increased in two of four regions in November. Construction of new homes and apartments rose 8.6 percent in the Northeast and 18.5 percent in the South. Housing starts declined in the Midwest by 6.3 percent for the month and in the West by 8.1 percent. All four regions reported a pace of construction well below a year earlier.
Single-family permit issuance was down 3.1 percent on a national basis to a pace of 1.144 million units for the month. This was 33.3 percent below a year earlier. The pace of multifamily permit issuance was down 2.7 percent to 362,000 units for the month and 23.8 percent below November 2005.
“The pattern of building permits points toward some reduction in housing starts in coming months,” said Seiders. “NAHB’s forecast shows a bottoming in starts in the first quarter of next year, followed by a recovery process that will raise housing production back up toward a sustainable trend performance in 2008.”
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