US home building falls in Aug but less than July

17 September 2008 15:13  [Source: ICIS news]

WASHINGTON (ICIS news)--US new home construction fell 6.2% in August and forward-looking building permits were off by nearly 9%, the Department of Commerce said on Wednesday, but both declines were less than those seen in July.

 

The department report on new residential construction said that in August housing starts - when work begins on a new home - were at a seasonally adjusted annual rate of 895,000.  That rate is 6.2% below the revised July estimate of 954,000 new homes and 33% below the August 2007 rate of construction.

 

Building permits, which are issued by local governments when contractors are ready to start work on a new home, were at a seasonally adjusted annual rate of 854,000 in August, which was 8.9% below the revised July level of construction activity and 36.4% below the year-earlier numbers.

 

However, the August fall of 6.2% in housing starts and the 8.9% decline in permits compared with July’s 11% drop in new home construction and an 18% reduction in authorisations.

 

Those moderating declines came as US residential builders reported an increase in contractors’ confidence about the housing market going forward.

 

The National Association of Home Builders (NAHB) said its home builders housing market index (HMI) gained two points in September to 18, rising from its record low of 16 in the previous two months.

 

NAHB president Sandy Dunn said many home builders “are sensing that home sales are nearing a turning point” because of the recent federal stimulus programme for first-time home buyers, the Washington support for mortgage market majors Fannie Mae and Freddie Mac and declining loan interest rates.

 

“Meanwhile, consumer confidence has risen and more households are saying that now is a good time to buy a home,” Dunn said. “All of these factors, along with the recent downward movements in mortgage rates, suggest that new home sales will be stabilizing in the final quarter of the year.”

 

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

The FTSE 100 index of UK corporate stocks dropped below the 5,000 mark again, falling 0.54% to 4,998.70 by 13:53 GMT, after the gloomy data sent US shares lower. The US Nasdaq index fell 1.72% to 2,169.91 at 14:07 GMT.

 

US housing starts

 

	Aug ‘08	July ‘08	July-Aug ‘08	Aug ‘07	Aug ’07 to Aug ‘08
US housing starts	.895m*	.954m*	-6.2%	1.34m*	-33.1%

* Seasonally adjusted and annualised

 

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By: Joe Kamalick
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