New-home construction for 2003 increased to 1.848 million units, the highest in 25 years, and 8.4 percent above the number of housing starts for 2002, the Commerce Department reported today.
For December, the nation’s home builders ramped up the pace of housing starts to a seasonally adjusted annual rate of 2.088 million units, a 1.7 percent increase over November’s revised estimate of 2.070 million units.
“Builders completed an extraordinary year and remain upbeat about the strength of the market for the year ahead,” said Kent Conine, president of the National Association of Home Builders (NAHB) and a home and apartment builder in Dallas. “Builders continue to meet a robust demand fueled by low interest rates and solid house-price performance.”
Single-family starts increased 13.6 percent over the year before to a seasonally adjusted annual rate of 1.664 million units. This was 0.6 percent below the all-time high in November.
The seasonally adjusted rate for multifamily housing in December was 424,000 units, 20.1 percent above the pace of a year ago and 11.6 percent above November’s pace.
“The strength in housing in 2003 was concentrated in single-family unit starts, while condominium units in multifamily structures gained ground as the year progressed,” said NAHB Chief Economist David Seiders. “As a result, the home ownership rate rose to record levels in 2003.”
The pace of construction of new homes and apartments was mixed across all regions in December, with decreases posted in the Northeast and Midwest while the South and West posted gains. For the year as a whole, the Northeast, Midwest, South and West were up 3.8 percent, 6.6 percent, 7.2 percent and 13.9 percent, respectively.
For the month, issuance of total building permits was up 3.3 percent from November to a seasonably adjusted rate of 1.924 million units. Single-family permit issuance increased by 2.8 percent and multifamily permit issuance was up 5.1 percent from the November pace.
“The anticipated decline in 2004 is predicated on a projected rise of mortgage rates as the year progresses, to 6.5 percent by year end,” Seiders explained. “However, interest rates are now lower than had been expected, and the rates may move up less than projected in the months ahead. Thus, the risk to NAHB’s housing forecast for 2004 are mainly on the upside, and there is a possibility 2004 could even surpass the excellent performance of 2003.”
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