Another Bad Month for Census Report on Permits, Housing Starts

Housing starts and the issuing of construction permits continued to fall in March. Permits for building privately-owned housing units were issued at a seasonally adjusted annual rate of 927,000, 5.8 percent lower than the revised February pace of 984,000 and 40.9 percent below the March 2007 estimate of 1,569,000.

According to a monthly report issued on Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, permits for single family houses were down 6.2 percent from February and 46.4 percent from March 2007 while permits for buildings with 5 or more units of residential housing were off 4.0 percent and 21.9 percent respectively.

The Northeast and the South were in positive territory with the former showing a 3.8 percent increase in total permits over the month before and the later eking out 0.4 percent growth. The Midwest was down 10.6 percent and the West fell 20 percent.

Privately-owned housing starts in March declined 11.9 percent from revised February figures. The actual numbers were a seasonally adjusted rate of 947,000 starts in March; 1,075,000 in February. The March figure is 36.5 percent lower than the pace of 1,491,000 starts recorded one year earlier.

Single family housing starts were at a rate of 680,000, 5.7 percent below the February figure of 721,000 and 43.6 percent lower than the 1,205,000 starts one year earlier.

A National Association of Home Builders (NAHB)/Wells Fargo survey reported that builder confidence in the housing market remained unchanged at near record low levels this month. According to the groups' monthly Housing Market Index ((HMI), was at 20 out of a possible score of 100. In December the HMI hit a record low of 18. The survey started in 1985.

The Index is based on responses from builders as to how they perceive current single family house sales now and how they expect those sales to look in six months. Builders rank those perceptions as good, fair, or poor. They are then asked to rate current buyer traffic from very low to very high. Scores for each component are ranked and then used to compute an overall score which is the HMI. A score over 50 for any of the components or for the HMI as a whole indicates that more builders view sales conditions as good than poor.

The component measuring current sales conditions was down two points in April to 18, its lowest level since November of last year. The component measuring buyer traffic held even at 19 for the third month in a row after hitting a low of 13 in December. There was some good news, however, as builders' expectation for future sales (six months hence) rose four points to 30.

"While builders continue to report improvements in traffic through their model homes compared with late last year, this activity has not translated to actual sales. That's where Congress can make a big difference," noted NAHB Chief Economist David Seiders. "Measures that stimulate consumer confidence in the housing market, push the fence-sitters into the ring and put a floor under house prices can successfully halt the drag that housing is exerting on the national economy, and help stabilize financial markets at the same time. But such measures need to be implemented as soon as possible in order to limit the severity of the economic recession that now is underway."