Housing starts in August 2006 fell 6.0% to a seasonally adjusted annual rate of 1,665,000, 19.8% below August 2005 levels. New building permits down 2.3% from July and down 21.9% from August 2005.
The nearly 20% drop in new construction is both bad and good news for the housing market generally. The bad news is fairly obvious - sales are off and builders don’t want to sink money into a down market.
The good news is that this substantial drop in new homes being built should help balance the drop in demand from a relatively small interest rate increase. Long term interest rates are up about seven-tenths of a percent. Adjustable rate mortgages have risen more, but are still up less than 1.25 percent.
Current Housing Starts Release from the Census Bureau [Excel Spreadsheet in popup window]
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