Housing Starts Hit 16-Year Low, Likely Fell Below Sales Pace in February
Housing starts continued to slide during February, as builders kept paring back the pace of new home starts to their lowest level since 1991. Single-family housing starts posted a 6.7 percent decline to a seasonally-adjusted annual rate of 707,000 units, according to figures released Tuesday by the U.S. Commerce Department. 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. Single-family permits, often a leading indicator of future starts, also fell. February saw 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, the Commerce Dept. reported. All may be signs that builders are finally paring back starts to a level in line with sales activity. The eponymous author writing at the Calculated Risk blog suggested that Tuesday's numbers may actually indicate that pace of starts is now below sales activity. "It appears from the ... report released this morning that the home builders are finally starting fewer homes than they are selling," he wrote. "If correct, the inventory of new homes for sale will start to decline." A large overhang of inventory is commonly cited by economists as the largest obstacle to any housing recovery; an abundance of housing supply, especially the bank-owned variety, depresses prices. Builders call for action on Capitol Hill "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 NAHB -- while suspending its formal lobbying efforts earlier this year -- has nonetheless been actively pushing for Federal legislation that would provide for 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," Seiders suggested, were certain reforms to be put into place quickly.