Nationwide housing starts declined 11.7% according to the U.S. Commerce Department but it’s not all bad news as single family starts only dropped 1%. The bad news is that the drop is mostly suffered by multifamily which plummeted 43.5%. Yesterday, the National Association of Home Builders (NAHB) reported builder confidence at stable rates and sources tell us that various builders don’t have a positive outlook for 2011. Nationally, permit activity remained unchanged in October, although the Midwest region jumped up 14% with declines in all other areas.
“Home builders continue to be very cautious about starting new projects at this time,” said Bob Jones, chairman of the NAHB. “That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth.”
NAHB claims that “much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.”
In January of this year, NAHB laid claims of an impending multifamily shortgage (which we disputed) and again we have to point out that the glut of homes is more likely to be in bank owned homes than new homes.
Housing starts didn’t fall in all areas, in fact, in the Northeast, starts rose 12.9% and jumped up 1% in the Midwest. The biggest dip in starts were felt in the South with a dip fo 13.4% and 30.5% in the West.
The struggle for builders to obtain financing and maintain traffic will continue to struggle next year. Perhaps we should look toward 2012 for a builder recovery?
Kelsey Teel
November 17, 2010 at 8:53 pm
Not great news, but I’m happy to see that the single family starts only dropped 1%. However, a 43.5% drop in multifamily is huge! WOW. It really doesn’t surprise me considering all of the multi-family projects that have either been built and remain empty or have completely halted construction. The last thing we need is more empty buildings and abandoned projects.
I know of a $5 million project in particular that has been completely planned with 32 units pre-sold and countess dollars spent on marketing, but it can’t even begin building due to problems with obtaining construction financing.