The rate of housing starts fell to the lowest level in a decade in July, falling an estimated 20.9 percent below the July 2006 rate, according U.S. Census Bureau and Department of Housing and Urban Development announced today.
The seasonally adjusted annual rate of building permits dropped an estimated 22.6 percent year-over-year in July and housing completions were down about 22.2 percent, the agencies also reported. This rate is a projection of a monthly total over a 12-month period, adjusted to account for seasonal fluctuations in construction activity.
Today’s report on construction statistics follows a Wednesday announcement by the National Association of Home Builders that an index gauging builders’ confidence in the housing market hit its lowest level this month since January 1991.
“Builders realize that issues related to mortgage credit cost and availability have become more acute, filtering some prospective buyers out of the market and prompting others to delay their decision to purchase a new home,” stated Brian Catalde, the builder group’s president.
And the group’s chief economist, David Seiders, stated, “There is no question that problems in the subprime mortgage sector have spilled over to other components of housing finance, including the Alt-A and jumbo markets, delaying a revival of the single-family housing market.”
The seasonally adjusted annual rate of building permits was 1.37 million in July. The rate of single-family building permits dropped 24 percent year-over-year in July, falling to 1 million.
Total housing starts hit a rate of 1.38 million in July, and single-family starts dropped to 1.07 million, down 25.4 percent compared to the same month last year.
Housing completions dropped to 1.51 million in July, and single-family completions were down 27.7 percent year-over-year in July at 1.2 million.
Regionally, the rate of building permit authorizations declined about 25.6 percent in the South, 22.2 percent in the Midwest, 20.7 percent in the West and 12.5 percent in the Northeast in July compared to July 2006.
Month-to-month changes in seasonally adjusted statistics can show irregular movements, the agencies noted, and it can take three months to establish an underlying trend for building permit authorizations, four months for total starts, and six months for total completions.
Statistics are estimated from sample surveys and are subject to sampling variability and non-sampling error including bias and variance from response, non-reporting, and under-coverage.
On average, the preliminary seasonally adjusted estimates of total building permits, housing starts and housing completions are revised about 1 percent, according to the report.