Housing Starts Settle Down

WASHINGTON, August 16 – In line with expectations, the pace of nationwide housing starts slowed 2.7 percent in July to a seasonally adjusted annual rate of 1.65 million units, the Commerce Department reported today. This rate is exactly on pace with the number of starts that the National Association of Home Builders (NAHB) is forecasting for the year as a whole.
Meanwhile, permits for new housing construction remained virtually unchanged
in July at a 1.7 million-unit rate.

"Builders were finally able to take a breather following the breakneck speed
at which they were filling orders in this year's first half," said Gary Garczynski, NAHB president and a builder/developer from Woodbridge, Va. "But
I'd caution anyone against linking today's report to some kind of housing 'bubble.' Historically low mortgage rates continue to bring buyers to the market. Moreover, we're forecasting a healthy 1.65 million starts for all of
2002 - the best number in 15 years."

Garczynski said that to hit the NAHB forecast, some slowdown was inevitable
from the average 1.69-million-unit pace set in the first two quarters. But
this slowing is occurring gradually.

Single-family housing starts declined 2.2 percent to a seasonally adjusted
annual rate of 1.32 million units in July. This was only slightly lower than
the average 1.33-million-unit rate set in the second quarter. Meanwhile,
multifamily starts declined 4.7 percent to a rate of 328,000 units. This
compares to a second-quarter average of 337,000 units.

Overall housing starts declined 11.7 percent in the Northeast, while the
South and West reported more modest declines of 3.6 percent and 4.3 percent, respectively. As the exception to the rule, the Midwest posted a 5.8 percent gain in housing starts.

Meanwhile, building permits, which can be an indicator of future building
activity, rose in three out of four regions in July. The Northeast, Midwest and West posted gains of 3 percent, 1.5 percent and 0.5 percent, respectively, while the South posted a 2.5 percent decline.

"Housing production has been running above last year's healthy pace," said
Garczynski. "This is good news for builders as well as for the economy." He
noted that NAHB is forecasting 1.32 million single-family housing starts for all of 2002, which would be the largest number since 1978.