WASHINGTON, Oct. 20 – Nationwide housing production remained virtually unchanged in September, edging up half of a percent to a seasonally adjusted annual rate of 590,000 units, according to U.S. Commerce Department figures released today. Meanwhile, issuance of new building permits, an indicator of future construction activity, fell by 1.2 percent to a seasonally adjusted 573,000 units.
“Builders are being extremely cautious right now in their efforts to maintain a modest inventory of new homes for sale,” said Joe Robson, a home builder from Tulsa, Okla. and chairman of the National Association of Home Builders (NAHB). “On top of the fact that it is nearly impossible to obtain construction financing for new units, there are widespread concerns about what will happen to demand with the expiration of the $8,000 first-time home buyer tax credit at the end of November.
“At a time when the national economy and housing market are just embarking on a fragile recovery period, Congress has the ability to keep things moving forward and create much-needed jobs across the country by moving now to expand eligibility for the tax credit to all home buyers and extend the credit’s effective date for one year,” Robson noted. “Doing so would generate nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues.”
“As our latest member surveys have indicated, new-home production is continuing at a very low level with few signs of improvement as builders confront the multiple challenges of a severe credit crunch for builder loans, inappropriate appraisals, and the impending expiration of the home buyer tax credit,” said NAHB Chief Economist David Crowe. “In particular, the fact that builders are pulling fewer permits right now is an indication of the increasing uncertainty about where this market is headed. Clearly the positive momentum we have seen in the housing market has begun to stall, and congressional action to expand and extend the tax credit may be the only way to keep us from moving back down the hill.”
Overall housing starts posted a 0.5 percent gain to a seasonally adjusted annual rate of 590,000 units in September, returning to a production rate last seen in June. Starts of new single-family homes made up some of the ground lost in previous months with a nearly 4 percent gain, to a 501,000-unit rate, while multifamily starts fell 15.2 percent to a meager 89,000 units.
Housing starts were down across three out of four regions in September, with the Northeast, Midwest and West posting declines of 11.5 percent, 6.1 percent, and 10.2 percent, respectively. The South was the only region to register an increase in starts during September, with a 7.5 percent gain for the month.
Permit issuance, which can be an indicator of future building activity, fell by 1.2 percent overall to a seasonally adjusted annual rate of 573,000 units in September. Single-family permits were down 3 percent to 450,000 units while multifamily permits gained 5.1 percent to 123,000 units.
Regionally, permits were mixed in September. The Northeast and South posted declines of 3.1 percent and 1.7 percent, respectively, while the Midwest posted a 1 percent gain and the West posted no change for the month.