Economists
expected
a
rebound
in
housing
starts
for
February
because
of
worse-than-usual
weather
conditions
in
January,
but
building
permits
were
lower
than
expected
for
single-family
homes,
shifting
emphasis
to
multi-family
apartments
and
condos.
The
good
news
was
that
housing
starts
rose
by
nine
percent
to
an
annual
rate
of
1.53
million
in
February,
up
from
the
revised
1.40
million
homes
pace
set
in
January.
Starts
are
calculated
by a
monthly
Survey
of
Construction
based
on
samples.
But
builders
sensed
further
weakness
in
housing,
and
building
permits
declined
2.5
percent
to
an
annual
rate
of
1.53
million
from
January's
higher
annual
pace
of
1.57
million.
Building
permits
are
considered
less
volatile
than
starts
because
weather
plays
an
important
role
in
building.
They
are
calculated
by
The
Building
Permits
Survey
which
produces
estimates
of
the
permits
for
new
housing
units
monthly.
Permits
in
February
were
at a
nine-year
low.
New
home
sales
made
news
in
January
by
plummeting
16.6
percent,
according
to
the
Commerce
Department,
the
slowest
rate
of
sales
in
13
years.
Since
the
red-hot
summer
of
2005,
new
home
sales
have
fallen
by
nearly
one-third,
which
is
impacting
all
verticals
related
to
it,
including
existing
home
prices
and
home
improvement.
But
there
are
some
advantages
for
homebuyers
that
didn't
exist
a
year
ago,
such
as
lower
mortgage
interest
rates
and
higher
inventories
to
choose
from,
sweetened
with
additional
incentives:
Average
30-year
fixed
rates
are
hovering
today
at
6.14
percent.
With
fixed
mortgage
rates
sharply
lower
than
summer
2006,
when
rates
nearly
approached
7
percent,
homebuyers
have
the
opportunity
to
get
into
a
home
without
as
much
risk,
if
they
can
qualify.
Demand
dictates
production
in
new
home
building.
If
demand
throttles
back,
there
are
fewer
permits
applied
for
and
fewer
homes
constructed
and
completed.
New
home
sales
reached
a
record
in
2005
of
1.72
million
units.
As
early
as
September
2006,
when
the
National
Association
of
Home
Builders
published
it's
Housing
Economics.com
Long-Term
Forecast,
the
NAHB
found
that
the
shift
in
demand
for
housing
from
2000
to
2005
"went
beyond
the
shares
implied
by
demographics,
and
was
largely
powered
by
changes
in
actual
or
anticipated
costs."
"The
overall
cost
of
owning
a
single-family
home
include
the
cost
of
financing,
maintenance,
property
tax,
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and
foregone
income
on
alternative
investments,
offset
by
capital
gains
from
appreciation
and
reduced
income
tax
burdens,"
says
the
forecast.
Housing
had
a
tailwind
from
lower
mortgage
interest
rates,
alternative
investments
were
producing,
and
housing
appreciation
rose,
but
now
high
costs
are
inhibiting
buyers
from
coming
to
the
table.
The
NAHB
knows
that
in
the
years
ahead,
"mortgage
rates
will
be
higher,
while
the
unsustainable
rate
of
appreciation
in
home
prices
will
move
lower.
Home
ownership
will
still
attract
most
households,
but
it
will
no
longer
appear
to
be a
free
lunch."
The
number
of
new
conventional
houses
built
during
the
decade
between
2006
and
2015
will
exceed
the
number
produced
in
any
previous
decade,
says
the
home
builder
organization.
Yet,
the
average
number
of
housing
starts
will
be
high
relative
to
multi-year
averages
in
the
past,
with
not
one
year
in
the
forecast
expected
to
exceed
the
record
number
of
homes
built
in
2005.
One
reason
there
will
be
fewer
single-family
homes
started
is
competition
from
condos,
townhomes
and
apartments
that
provide
alternative
forms
of
homeownership
for
the
growing
number
of
singles,
couples,
and
nontraditional
families
that
are
increasing
in
number
as
heads
of
households.
Home
prices
and
home
building
costs
have
increased
faster
than
overall
inflation,
along
with
the
size
of
homes,
which
means
that
new
homes
built
in
the
future
will
be
likely
feature-rich,
but
smaller.
Already,
homes
are
smaller
than
they
were
only
two
years
ago.
The
average
floor
area
in a
newly
built
home
in
2005
reached
an
all-time
high
of
2,434
square
feet --
up
from
an
average
2,349
square
feet
in
2004
and
just
1,645
square
feet
in
1975.
For
homebuyers
who
want
to
buy
big,
the
time
is
now.
With
construction
costs
going
up
over
8
percent
annually,
new
homes
in
the
future
are
likely
to
stay
the
same
size,
and
will
be
increasingly
two-story
over
one-story,
or
smaller
by
about
100
square
feet,
as
in
condos
or
townhomes.
The
NAHB's
projection
for
the
year
2015
is
that
a
typical
construction
will
be a
2,330-square-foot,
two-story
home
with
2.5
to
3.5
bathrooms
and
4
bedrooms.
In
order
to
control
ownership
costs,
homes
will
have
to
be
increasingly
"green."
While
the
NAHB
expects
home
sizes
to
remain
large,
the
introduction
of
the
Echo
Boomer
as
homebuyers
will
reignite
the
starter
home
boom,
as
the
Baby
Boomers
did
in
the
1970s.
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