Starts Dip to Lowest Level in Ten Years

Home builders last month started the fewest number of homes since January of 1997, with starts down 20.9% from July, 2006, to a seasonally adjusted annualized rate of 1.38 million units, according to the Census Bureau.
Single-family housing starts were down 25.4% for the month year-to-year to a seasonally adjusted annual rate of 1.07 million units, the lowest rate since December, 1996, but multi-family starts were virtually flat with July, 2006 at a 311,000-unit pace.
Through seven months, some 859,100 homes have been started across the country, 25.0% below the number through seven months of last year.
Nor is there much good news on the horizon. Building permits in July dropped 22.6% compared with July, 2006, to a seasonally adjusted annual rate of 1.37 million units, the lowest since September, 1996. Single-family permits dropped 24.0% in July year-to-year to a rate of just over one million units, with multi-family permits down 18.7% to 370,000 units.
“While there is no immediate rebound in sight, NAHB is currently expecting new-home sales to stabilize by the end of this year and housing starts to stabilize by the middle of 2008,” said NAHB Chief Economist David Seiders. “We expect overall economic conditions, including solid job and income growth, to continue to be supportive of housing. Furthermore, we expect interest rates in government-related components of the mortgage market to remain favorable on a historical basis and we’re assuming that other parts of the housing finance system will regain footing before long. Downside risks definitely surround the latter assumption.”