Publication Date:
Wed, 2001-12-26 18:00
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The seasonally-adjusted annualized rate of building permits let for new housing construction fell to the disappointing level of 1.473 million during October 2001. This was an annual pace of permit issuance 3.6% lower than the month before. And this October’s permit total was 5.7% below the October 2000 level.
October 2001 permits were issued at an annualized rate 8.5% lower than the average recorded over the first three-quarters of this year. The number of permits issued for construction of new single-family homes fell a modest 2.1% between September and October, but the multifamily permits pace plunged 8.2% over the month.
The annualized pace of total housing starts also fell between September and October 2001. However, the loss was a comparatively moderate 1.3%, and October 2001 starts were still at a level 1.6% above the annualized rate for October of 2000.
The single-family starts pace eased 1.2% over the month, while units started in multifamily buildings declined by 1.6%. Through the first 10 months of 2001, total housing starts nation-wide were 2.1% greater than over the January-October period of 2000. Single-family starts through this October were running 3.4% ahead of the 2000 pace, while multifamily housing starts were 2.5% fewer during January-October 2001 than over the first 10 months of 2000. Regionally, the West recorded 4.3% more starts over January- October 2001 than over the first 10 months of 2000. The South posted an increase of a more modest 2.7% through 10 months of this year, while total starts in the Midwest through last October were up 1.5% from the January-October 2001 total. Starts in the Northeast, however, trailed the year-earlier total.
Thirty-year fixed-rate mortgages carried an average interest rate of 6.62% this past October, down sharply from the 7.78% average of October 2000. Adjustable rate mortgages tied to the yield on one-year treasury bills fell to 5.28% during October 2001.
Single-family home sales remained surprisingly healthy during October, especially given the fact that employment growth has stalled and the nation has plunged into its first recession in a decade. Existing single-family home sales had plunged by almost 12% between August and September, but bounced back to recover almost half that loss (+5.5%) during October. And new single-family home sales were revised higher during September and added a slight 0.2% to the annualized sales pace total during October. It’s clear that low interest rates are helping to keep the housing market on a reasonably even keel during the current period of serious economic challenge. Through the first 10 months of 2001, single-family home sales were running about 4% ahead of the January-October 2000 total.
Of Note:
Construction spending (i.e., dollar-valued) numbers for October showed the pace of new residential construction improving 0.5% from the relatively weak September level. More significantly, estimated spending for home improvement projects increased by 3.5% between September and October - an early reflection, perhaps, of the "cocooning" or "nesting" instinct that seemed to emerge in the immediate aftermath of the September 11th attacks.
