Responding to worsening conditions in the nation's housing and financial markets, single-family home builders continued to slow the pace of new construction in June, according to the latest data released by the U.S. Commerce Department.
Starts of new single-family homes declined 5.3 percent to a seasonally adjusted annual rate of 647,000 units in June. This was the slowest pace in 17 years, and marked a decline of 64.5 percent from the peak of the building boom in January of 2006. Meanwhile, issuance of building permits for single-family homes declined 3.5 percent to a rate of 613,000 units.
"Builders continue to do their part to reduce inventories of unsold homes on the market by reining in new construction," noted Sandy Dunn, president of the National Association of Home Builders (NAHB) and a home builder from Point Pleasant, W.Va. "Now more than ever, it's up to Congress, which must finish its work on a badly needed housing stimulus package that will help stabilize the housing market and stem the negative effects of the housing downswing on our economy."
"The single-family data from today's report is exactly in keeping with what our builder members have been telling us in recent surveys," added NAHB Chief Economist David Seiders. "Traffic of prospective buyers is down substantially, and consumer confidence is very low. Job-market losses, deepening problems in the finance arena and sinking home values aggravated by the wave of foreclosures are all contributing factors that are keeping potential home buyers on the sidelines. Clearly there is a need for immediate action by Congress and the Administration to help put an end to this downward economic spiral and restore the homeownership dreams of many Americans."
Overall housing starts and building permits posted misleading gains of 9.1 percent and 11.6 percent, to 1.07 million units and 1.09 million units, respectively, for the month, largely due to a one-time bump in multifamily activity that was related to newly instituted building code changes in New York City. Excluding the Northeast multifamily data, there was a 4 percent decrease in overall housing starts and a 0.7 percent gain in building permits for the month.
Multifamily housing starts, fueled by a big jump in the Northeast, posted a 42.5 percent gain to a rate of 419,000 units in June. Multifamily permits, also skewed by the Northeast/New York City data, posted a 39.4 percent gain to 478,000 units.
The latest regional data showed that Northeast housing starts more than doubled in June (as a result of the New York City data), while Midwest starts posted a 10.5 percent decline, starts in the South posted a 0.4 percent gain and starts in the West registered an 8.2 percent decline in June. Building permits (again affected by the New York City data) showed a 73 percent gain in the Northeast for June, along with more typical numbers such as a 2 percent decline in the Midwest, a 3 percent gain in the South and a 0.9 percent gain in the West.
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