March 18, 2008 – Single-family housing starts continued on a downward trajectory in February, posting a 6.7 percent decline to a seasonally adjusted annual rate of 707,000 units, according to figures released today by the U.S. Commerce Department. Meanwhile, production in the more volatile multifamily sector registered a 14.4 percent gain to 358,000 units, limiting the decline in total housing starts to a rate of 1.065 million units — 0.6 percent below the revised January pace.
“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,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. “We’re doing what we can to restore balance to the supply-demand equation, but we 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.”
“Our latest surveys of single-family builders reveal that many prospective buyers are looking into a home purchase at this time, but that they are unwilling or unable to make their move with conditions in the overall economy and financing arena what they are,” said NAHB Chief Economist David Seiders.
“The Federal Reserve’s latest moves to shore up financial markets have certainly been welcome developments, and a significant interest rate cut following today’s FOMC meeting will be more positive news,” Seiders said. “Beyond this, Congress and the Administration should follow up on the recently enacted economic stimulus package with additional measures aimed directly at boosting the housing market. If prompt action is taken in the direction of a home buyer tax credit, FHA modernization and GSE oversight reform, a housing recovery could take shape by this year’s second half and the benefits of that to the overall economy would be substantial.”
Regionally, housing starts were unchanged for the month in the Midwest, up nearly 4 percent in the South and up 5.1 percent in the West, while the Northeast posted a 27.7 percent decline that offset a large boost in the previous month. However, every region was down on a quarterly basis in February.
Permit issuance, which can be an indicator of future building activity, declined 7.8 percent overall in the month to a seasonally adjusted annual rate of 978,000 units, with a 6.2 percent decline registered in the single-family sector to 639,000 units and a 10.8 percent decline on the multifamily side to 339,000 units.