Indicating a continuing free-fall in the housing market, production of new single-family homes and permit issuance declined by double digits in December, falling to their lowest levels on record for the month, according to U.S. Commerce Department figures. In addition, total starts and single-family starts fell to record annual lows in 2008.
Total housing starts posted a 15.5 percent decline to 550,000 units in December, an all-time low. Meanwhile, starts of new single-family homes posted their eighth straight monthly decline, falling to an all-time low of 398,000 units. This was down 13.5 percent from the previous monthly low in November. Multifamily starts fell 20.4 percent in December to an annual rate of 152,000.
“Builders continue to be in a de facto moratorium on building in hopes of getting this inventory level under control,” said Sandy Dunn, chairman of the National Association of Home Builders (NAHB) and a home builder from Point Pleasant, W.Va. “With builders doing their part, Congress and the Administration must act quickly to pass a stimulus package that will stop the bleeding in the housing market.”
“These dismal housing production numbers are in line with our builder surveys that show a record low in confidence in the housing market,” said NAHB Chief Economist David Crowe. “Builders are addressing the supply issue. Washington policymakers must now act to boost the demand side of the equation by including a robust home buyer tax credit and mortgage rate buy down in the stimulus package that is moving through Congress.”
Overall permit issuance, which can be an indicator of future building activity, fell 10.7 percent to a seasonally adjusted annual rate of 549,000. Single-family permits declined 12.3 percent to a 363,000-unit rate while multifamily permits were down 7.5 percent to 186,000 units.
Housing starts were down in three out of four regions in December. The Midwest posted a decline of 24.5 percent, the South fell 22.2 percent, and the West dipped 2.2 percent, while the Northeast registered a 12.7 percent increase.
On an annual basis, year-end figures from the Commerce Department show that overall housing starts plunged to a record low of 904,000 units in 2008, down 33.3 percent from the previous year. Single-family starts were down 40.5 percent for the year to 622,000 units, while multifamily starts were off by 8.8 percent to 282,000 units. Overall permit issuance for new homes and apartments declined 36.2 percent to 893,000 units, with a 41.8 percent drop on the single-family side to 570,000 units and a 23 percent decline on the multifamily side to 323,000 units.
(Thousands of units, seasonally adjusted annual rate)