Property ManagementHousing Starts Decline Slightly
Housing starts declined 1.3 percent in October to a
seasonally adjusted annual rate of 1.55 million units, the Census Bureau
reported today. Issuance of building permits also dropped in October,
falling by 3.6 percent to an annual rate of 1.47 million units.
"These slight declines actually are reassuring and indicate that the net
effects of the attacks on America in September are not nearly so bad as they
might have been," said Bruce Smith, president of the National Association of
Home Builders (NAHB) and a home builder from Walnut Creek, Calif. "NAHB"s
own Housing Market Index, which was released last Friday, rebounded by two
points following a significant decline in early October. This measure,
together with the starts and permits data for October, reinforces our belief
that the economy will see a short, shallow recessionary period which will be
followed by a rebound in the second quarter of 2002."
Smith added that the investment aspects of housing and low mortgage interest
rates have been keys to the housing market"s resilience. "With the stock
market down significantly and the nation still suffering from the emotional
fallout of the September 11 attacks, housing has become an even more
attractive investment. Not only is housing a solid investment that typically
shows consistent gains, it contributes greatly to a family"s sense of
security and well-being," he said.
Smith added that record low interest rates, which have been a key factor in
the housing market"s ongoing strength this year, continue to bolster housing
activity. "Mortgage interest rates are now about 6.5 percent for a 30-year,
fixed-rate mortgage. That"s the lowest level in three decades," Smith said.
Both single- and multi-family starts declined slightly in October, he added.
Single-family starts dropped 1.2 percent to a seasonally adjusted annual
rate of 1.24 million and multifamily starts dropped 1.6 percent to a rate of
310,000. Single-family permits were off by 2.1 percent while multifamily
permits fell by 8.2 percent in October.
Regionally, starts increased 5.3 percent in the Northeast and 14.3 percent
in the Midwest while they were unchanged in the South and declined 16.7
percent in the West. Permit issuance was down in all regions but the
Northeast.
"In light of these latest numbers, NAHB"s housing forecast appears to be
right on target," Smith said. "We are projecting a mild, brief recessionary
period that will be followed by a re-bound in the second quarter of 2002. We
expect to see a total of 1.57 million starts this year followed by an equal
number of starts next year. This is a solid, healthy production level, and
given the demographics of demand, we think the numbers will be even higher
in the years ahead."