Housing production slows from record 1999

Despite a slight uptick at the end of 2000, housing production for all of last year fell to 1.59 million units, down 4.4 percent from 1999's exceptionally strong pace of 1.67 million starts, the Commerce Department reported.

"Housing production in 2000 was right in line with our projections for a modest slowdown to a still solid pace following two years of very strong activity in 1998 and 1999," said Robert Mitchell, president of the National Association of Home Builders, in an NAHB release.

Recent builder surveys and government reports on consumer confidence and building permits indicate that some further slowing of the market is likely in 2001, Mitchell said.

However, "Low interest rates are helping offset negative economic factors, and long-term mortgage rates will probably stay close to 7 percent throughout the new year," he added.

NAHB predicts another 5 percent decline in housing starts in 2001, followed by a 3 percent gain in 2002.

In December, overall starts rose a marginal three-tenths of 1 percent from the previous month to a seasonally adjusted annual rate of 1.58 million units.

That gain was due entirely to an end-of-the-year bounce in the single-family sector, where starts rose 6 percent to a rate of 1.31 million units.

For the year 2000, single-family starts were down 5.4 percent from 1999, at 1.26 million units.

Multifamily starts fell nearly 21 percent in December to a seasonally adjusted, annual rate of 262,000 units, more than offsetting a double-digit surge in November.

For all of 2000, multifamily production was down marginally from 1999, at 330,000 units.

Regionally, starts activity rose nearly 9 percent in the Northeast, 5.2 percent in the South and 5.8 percent in the West in December, while the Midwest posted a 21 percent decline due partly to unusually severe winter weather.

However, every region saw housing production decline in 2000 from overall 1999 activity, with the largest setbacks in the Midwest and South.

Building permits, which can be an indicator of future building activity, fell across the board in both December and all of 2000.

Overall permits fell 6.6 percent in December to a seasonally adjusted annual rate of 1.5 million units.

That decline was due to a nearly 16 percent drop-off in multifamily permits and a 3.3 percent decline in single-family permits.

For the entirety of 2000, permits fell 5.6 percent from 1999 to 1.57 million, on a 5.3 percent decline in single-family permits and a 7 percent drop in multifamily permits.