The rate of single-family housing starts and single-family building permits authorized dropped for the 11th consecutive month in February, falling to the lowest level since January 1991, the U.S. Census Bureau and Department of Housing and Urban Development reported today.
The seasonally adjusted annual rate of single-family housing starts was 707,000 in February, down about 40.5 percent compared to February 2007, and the rate of single-family building-permit authorizations fell about 41.9 percent compared to February 2007. This rate is a projection of a monthly total over a 12-month period, adjusted to account for seasonal fluctuations in construction activity.
Total housing starts, including single-family starts and starts of structures with two or more units, fell to a rate of 1.07 million in February, down about 28.4 percent compared to February 2007. The February 2008 rate was the lowest rate of total housing starts since September 1991, when the rate was 1.02 million.
Total building-permit authorizations for housing units dropped to 978,000 in February, down about 36.5 percent from the same month last year. The February 2008 rate was the lowest rate since September 1991, when it was 974,000.
Regionally, the rate of new housing units authorized by building permits dropped about 44.8 percent in the West, 34.9 percent in the South, 32.7 percent in the Midwest and 26.4 percent in the Northeast in February compared to the same month last year. And the rate of housing starts fell about 36.5 percent in the West, 30.5 percent in the South, 23.9 percent in the Northeast and 2.5 percent in the Midwest from February 2007 to February 2008.
There were an estimated 175,400 housing units authorized but not yet started at the close of February 2008, down 13 percent compared to 201,600 units in February 2007. And there were a seasonally adjusted rate of 1.03 million new housing units under construction at the end of February 2008, down 14.9 percent compared to February 2008.
The rate of new housing units completed in February 2008 was 1.21 million, down about 25.8 percent compared to February 2007. And the rate of single-family housing units completed was 903,000 in February, down about 30.6 percent from the same month last year. The total rate was the lowest since 1.2 million in December 1995, and the single-family rate was the lowest since 895,000, reported in April 1992.
Month-to-month changes in the seasonally adjusted statistics can show irregular movements, the agencies noted in the report, and it can take three months to establish an underlying trend for building-permit authorizations, four months for total starts, and six months for total completions. Statistics are estimated from sample surveys and are subject to sampling variability and nonsampling error including bias and variance from response, nonreporting and undercoverage, according to the report.
Preliminary seasonally adjusted estimates of total building permits, housing starts and housing completions are revised about 1 percent, on average. New residential construction data for March 2008 will be released at 8:30 a.m. EDT on Wednesday, April 16.
National Association of Home Builders President Sandy Dunn said in a statement today, "Builders continue to scale back production of single-family homes in an effort to contain inventories amidst ongoing problems in the mortgage finance arena and other challenges that are keeping many potential buyers on the fence."
Dunn said that builders "need the Federal Reserve, Congress and the Administration to take immediate action on several fronts if there’s any hope of rebuilding consumer confidence and jump-starting the economy."
David Seiders, NAHB’s chief economist, said in a statement that the Federal Reserve has taken steps "to shore up financial markets," and he encouraged Congress and the Bush administration to take "prompt action … in the direction of a home-buyer tax credit, Federal Housing Administration modernization and government-sponsored entity oversight reform."
NAHB reported Monday that an index measuring builder confidence remained flat in March compared to February. The index, which is based on a survey that compiles builder ratings of current and future new-home market conditions, stood at 20 in March, near a historic low of 18 set in December 2007. An index score below 50 indicates that more builders view market conditions as negative than positive.
The portion of the index that gauges current sales conditions for new single-family homes was 20 in March, while builders rated traffic of prospective buyers at 19, and builders’ sales expectations for the next six months was rated at 26.
The California Building Industry Association and industry research company Hanley Wood Market Intelligence reported this week that sales of new homes fell 63.3 percent statewide in January compared to the same month last year, while the median price fell 12.8 percent. Single-family sales dropped 60.5 percent in California from January 2007 to January 2008, while the median price of single-family homes fell 14.9 percent. The California builders’ group reported 7,109 total statewide new-home sales in January, of which 5,090 sales were single-family homes.
"The winter of 2007-08 could wind up being the darkest hour for this housing market," said Jonathan Dienhart, director of published research for Hanley Wood Market Intelligence, in a statement. "With a weakening economy dragging down the nation this year, it will be especially difficult for the housing market to stage any kind of recovery. The best we can hope for are some signs of stabilization instead of more declines."
And Robert Rivinius, president and CEO for CBIA, encouraged the California Legislature to pass a series of bills intended to lessen the blow of harsh market conditions for builders.
One bill, Senate Bill 1185, would extend the period of time that builders can develop on approved home sites, while Assembly Bill 2604 would allow builders to pay local impact fees when a home is sold rather than when a building permit is obtained. A third measure, AJR 45, calls upon the U.S. Congress and the president to permanently increase the federal conforming loan limits and allow mortgages of up to $729,000 to be purchased by Freddie Mac and Fannie Mae.
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