Housing Starts Activity Records Decline During November

The seasonally adjusted annualized rate of building permits issued nationwide for new housing construction declined by 2.7% from October to November 2002. But this past November's permit pace -- 1.725 million units on an annual basis -- was still 4% stronger than the healthy level recorded during November 2001. Permits for single-family homes inched ahead 0.1% during November, but the number of units permitted for future construction in multifamily buildings fell by 12.2% from the strong October level.

Still, the overall permit pace during November was a bit higher in the West (+0.8%) than during the previous month. But the number of units permitted during November 2002 in the Northeast (-8.5%), Midwest (-5.2%) and South (-2.4%) fell below their October totals, even after seasonal adjustment.

Through the first 11 months of 2002, total permit volume nationwide was running 5.8% ahead of the total for January-November 2001. Single-family permit volume was 7.2% greater than a year ago through the first 11 months of 2002, while the total number of units newly permitted in multifamily buildings was ahead of the 2001 pace by 1.4%.

But the annualized pace of housing starts picked up steam during November, after an 8.4% decline from September to October. Total housing starts rose by 2.4% during November and, at an annualized volume of 1.697 million units, this past November's housing starts pace was 5.8% stronger than in November 2001.

New single-family homes were started at a rate 0.9% faster in November than during October. And the level of new multifamily construction starts during November 2002 was 10% higher than in the month before.

Housing starts remained well ahead of their year-ago total through the first 11 months of 2002. Through November, overall housing starts during 2002 totaled an estimated 1,575,500 units -- 5.2% greater than during the first 11 months of 2001. The multifamily sector recorded 2% more starts through November 2002 than over the first 11 months of 2001, while starts of single-family homes increased by 6%.

The starts pace rose in two of the four broad regions of the country from October to November 2002. Over-the-month losses of 11.9% in the West and 5.6% in the Northeast were more than offset by increases of 10.1% in the South and 10.9% in the Midwest. Through the first 11 months of 2002, total starts were up at least a bit compared with the year-ago pace in all regions of the nation. And the year-to-date gains were comparable across all regions: Midwest, 4.7%; West, 4.8%; Northeast, 5%; South, 5.6%.

Thirty-year fixed-rate mortgages carried an average interest rate of 6.07% this past November, down from the 6.66% average of November 2001. Adjustable-rate mortgages tied to the yield on one-year Treasury bills averaged an interest rate of 4.14% during November 2002, well below the 5.20% average recorded during November 2001.

Single-family home sales fell by 2.1% from October to November. But through the first 11 months of 2002, overall (new and existing, combined) sales were running more than 5% ahead of the total for January-November 2001.

The pace of new single-family home sales (at a seasonally adjusted annualized rate) increased by 5.7% from October to November of last year. And the November 2002 annualized sales pace was more than 14% healthier than during November 2001. The Commerce Department estimates that total sales of new homes throughout the nation during the first 11 months of last year was 7.7% greater than during January-November 2001.

The average price of a new home sold this past November ($218,900) was 5.8% higher than in November 2001. However the median price ($167,300) of new homes sold during November of this past year was 0.5% below the level for the same month a year earlier, a trend that bears watching in the months ahead, given the anxiety that many have regarding a possible bursting "bubble" of home values.

Existing single-family homes sold at an annualized rate of 5.56 million units during November 2002, according to the National Association of Realtors. This was a pace 3.5% slower than during the month before. However, compared with November 2001, existing home sales this past November were up 5.9%. And home resales continued to run at a record-high pace through the first 11 months of 2002. The NAR projects that overall sales of existing single-family homes during 2002 will total approximately 5.5 million units, up about 4% from the record level of 2001.

The median price of an existing home sold during November 2002 was $161,400, while the average price of a resale was $203,300. These values represented gains of 9.7% and 11.2%, respectively, over the prices recorded during November 2001.