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New Home Stats – Party Like it’s 2003?
The latest new home construction statistics from the Commerce Department
show a 7.4% dip in April in total housing starts as compared to March 2006.
April had a seasonally adjusted annual rate of 1.849 million units. Compared
to the first four months of 2005, new home construction is down 0.8 percent
for the first 4 months this year. As for building permits, housing units
authorized are at a seasonally adjusted annual rate of 1,984,000, which is
down 5.4% from March 2006 and down 8% from April 2005.
“We continue to believe that the evolving slowdown represents an orderly
adjustment toward more sustainable levels of housing production, following
the record surge in 2005 that was fueled by extraordinary demand for
single-family homes and condo units by investors/speculators.,” said NAHB
Chief Economist David Seiders. “NAHB’s forecast continues to show a 6.1
percent decline in total housing starts for 2006 as a whole, following an
equivalent increase last year.”
As far as inventory of new homes on the market, the supply of new homes for
March 2006 was 6.0 months worth of inventory. This is a drop from 6.4 months
worth of homes in February 2006, but is still 52% higher than 4.2 months
worth of new homes available in March 2005 and significantly higher than the
near record low of 3.6 months worth of new homes in March 2004. The supply
of new homes for April 2006 was 5.8 months of inventory, which is a small
tick down from March 2006. As long as builders slow production of new homes
to reel in the available supply we should be able to avoid the disaster of
an overbuilt marketplace.
“Builders have been trimming production of new units to maintain balance
between supply and demand,” said David Pressly, president of the National
Association of Home Builders (NAHB) and a home builder from Statesville,
N.C. “The declines in starts and permits reported today show that builders
are reacting properly to evolving market conditions.”
“NAHB’s current forecast shows about a 13 percent decline in new-home sales
for 2006 as a whole,” David Seiders added. A 13% decline would put the total
number of new homes sold for 2006 between the number of new homes sold in
2003 and 2004.
Click here to find out where builders should turn
for help as market conditions continue to evolve.
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