Home builders finished 2002 with a bang. By the end of the year, they built a whopping 1.7 million units, comprising 1.36 million single-family units and 345,000 multifamily units. The number of housing permits issued also reached its highest level since 1986. According to the National Association of Home Builders (NAHB), the gains in the housing market extended across all market sectors and every region of the country. “Our latest builder surveys show that the single-family market remains strong in January, and we're looking for 2003 to be another excellent year,” says David Seiders, NAHB chief economist. Here's how the housing market performed in December.
Housing starts rose 5% to a seasonally adjusted annual rate of 1.84 million units, with an almost 5% increase on the single-family side and a 5.5% increase on the multifamily side.
Starts rose across every region, posting gains of 18.2% in the Northwest, 4% in the Midwest, 0.6% in the South, and 9.8% in the West.
New home permits surged 8.2% to a seasonally adjusted annual rate of 1.88 million units. Single-family and multifamily permits rose 2.5% and 29%, respectively.
The recently released Federal Reserve Bank's “Beige Book,” an economic summary of regional residential construction conditions, reports that activity and home sales remained at high levels in most areas, despite information suggesting a slight cooling in market activity. The findings are summarized below:
Activity was strongest in the Richmond, Va., district, where growth in home sales remained strong and the housing market was described as “tremendously active.”
Market activity was down somewhat in the Boston, New York, Cleveland, Chicago, Kansas City, Mo., and San Francisco markets, due in part to normal seasonal slowing.
Reports from St. Louis indicate that home demand may be leveling off.
In Atlanta, home sales fell in December after an increase in November.
Construction activity was low in Dallas, although lower-priced homes (below $250,000) sold briskly.
Boston, Atlanta, and Chicago also reported stronger demand for mid- and entry-level homes and condos than for more expensive residences.
While the housing market is still on an upward curve, the Federal Reserve Bank found that the commercial real estate market is dropping in all districts. Richmond, Va., and St. Louis have experienced a slowdown in demand for office and industrial space, and office vacancy rates have increased slightly in Minneapolis-St. Paul, Chicago, and parts of the Kansas City, Mo., district. Cleveland and Minneapolis, however, reported some positive growth in the real estate market. Cleveland builders reported a current slowdown in commercial building but a surge in the number of prospective projects, and Minneapolis reported an increase in planned retail construction due to low retail vacancy rates.