Builders continue to cut back on new housing production, responding to weak demand and heavy supply in many parts of the country, according to the National Association of Home Builders.
Both total housing starts and the single-family component hit new lows for this cycle in July, dropping to the lowest levels since early 1991, and residential construction put-in-place naturally took another big step downward in July.
The production cutbacks have been most pronounced in the condo component of multifamily starts and in the for-sale component of single-family starts (excluding homes built on owners’ lots). The cutback in starts of for-sale units, to levels below new-home sales, has systematically reduced the inventory overhang in the new-home market during the past year (by nearly 25 percent).
However, the months’ supply still is running high (10.1) and the overhang of vacant units for sale (including those in the existing-home market) continued to run at a historically high level as of midyear. The supply overhang should delay the stabilization of housing production for at least a few quarters beyond the bottom for sales.
NAHB’s current forecast shows a bottom for single-family housing starts in the first quarter of 2009, completing a peak-to-trough decline