Housing Starts Are Positive Bellwether For Building Industry by Dena Amoruso A housing explosion is occurring across the land, with Meyers Group's U.S. Housing Markets division reporting a whopping 4% increase in 1999 over the previous year. Despite interest rate hikes, American confidence resulting in the American Dream was responsible for 1,231,800 building permits being pulled, and home ownership reaching an all-time high of 67%. Almost every housing market saw housing prices increase, and the sales of new, single family homes reached a record high figure of 904,000 units, according to the National Association of Home Builders. The housing boom saw 39 metropolitan areas in the U.S. reporting more than 10,000 total permits, with five of the ten setting annual single family permit records, including Atlanta, Dallas, Las Vegas, Minneapolis and Charlotte. "All the fundamentals were in place for strong sales in the last two years", said Robert Mitchell, a home builder from Rockville, MD, and newly elected president of the National Association of Home Builders (NAHB). "The healthy economy, low interest rates, rising incomes, low unemployment and stock market gains all contributed to exceptionally strong demand for new homes and, as a result, we had back to back record-breaking years in 1998 and 1999". Good weather conditions contributed to a strong year-end showing in 1999, according to the NAHB, with the sales of new single-family homes in December rising 4.5% from the previous month to a seasonally adjusted annual rate of 900,000 units. The Northeast saw the highest gains, where favorable weather had the most dramatic effect. A quiet slowdown is inevitable and may be happening as this goes to press; the fourth quarter of 1999 was the first quarter since early 1998 that a single-family construction record was not broken. According to John Burns, Principal of the Meyers Group, "Increasing mortgage rates have slowed housing construction, which should help cool the economy down to a sustainable level". The slowdown will hopefully limit the Fed's interest rate hikes in 2000. Among the larger states, the biggest slowdowns in multi-family construction occurred in Texas and Washington, where declines varied from 13% to 20%. The Texas slowdown is evidenced by the increasing presence of Texas-based multi-family developers, such as Trammel Crow and Morgan and Hanover, who are now developing in other states, especially California, according to the U.S. Housing Markets report. |
