September 19, 2006

By David F. Seiders
NAHB Chief Economist

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Housing Starts and Building Permits Slide in August
Housing starts declined 6 percent in August to a seasonally adjusted annual rate of 1.665 million, while permits fell 2.3 percent from July and for the seventh consecutive month to a 1.722 million level. The August 2006 permit level was the lowest in 4 years. The month-over-month August starts decline occurred in both the single-family (-5.9%) and multifamily (-6.7%) sectors and in three out of the 4 Census regions, the exception being the Northeast.

Housing Starts for August 2006
% Change
Download Housing Starts
1.665 M
1.772 M
- 6.0%

Read the full report and download data for Housing Starts and Building Permits.

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Characteristics of New Single Family Homes

New single-family houses are larger in size and have more amenities than ever before according to recently released in-depth analysis by NAHB that examines the characteristics of new single-family homes.

The analysis reveals that today’s new homes typically have more bathrooms and bedrooms but fewer come with decks, fireplaces, and basements.
NAHB’s economists analyzed the 2005 Survey of Construction (SOC), which was conducted by the U.S. Census Bureau. The SOC collects detailed information on the physical and financial characteristics of newly-built houses from builders or owners based on a sample of 2005 building permits.
NAHB’s analysis of the SOC provides additional geographical detail, exploring differences between attached and detached homes and expanding exterior wall material categories to show fiber cement and concrete block separately.
Among the findings is that gas heat continues to be the dominant heating fuel, followed by electricity and oil. Similar to previous years, the warm air furnace is the primary heating system used in most of the 2005 units. Also, the analysis showed that the most common primary exterior wall material in 2005 was vinyl, although vinyl’s share has fallen in the last few years. Fiber cement as an exterior material is also gaining popularity.
HousingEconomics Subscribers  click here to read the full report.


The Seiders' Report: Monthly Overview of the U.S. Housing Industry

• Growth of real GDP has been revised upward for the second quarter. However, the pace still qualifies as slightly below trend and the composition of second-quarter GDP has sobering implications for the third quarter of the year.

• Below-trend rates of economic growth are in store for the balance of this year and most of 2007, although trend-like growth should be attained by 2008 (our short-term forecast now extends through 2008).

• Payroll employment growth has shifted to a lower pace as growth of economic output has slowed, and the unemployment rate is off its cyclical low in the second quarter of this year. Job growth should continue around recent rates for some time and the unemployment rate should move up somewhat further before receding over the latter part of our forecast horizon.

• Core inflation still is running above the upper bounds of the Federal Reserve’s implicit comfort zones, although recent news is reassuring and the core inflation measures still are being boosted by the perverse “owners’ equivalent rent” imputations that should be discounted by the Fed.

• Economic developments since the August 8 FOMC meeting, particularly further deterioration of housing market activity and reassuring news on core inflation, point toward another “no change” decision at the next FOMC meeting on September 20. We’re still expecting stable monetary policy through mid-2007, followed by a bit of monetary ease.

• Fixed-income markets have feasted on the news of a slowing economy, limited core inflation and rising prospects for stable short-term interest rates. Long-term bond and mortgage rates have come down quite a bit from their mid-year highs, and we’re expecting only slight increases in coming quarters.

• The housing downswing deepened in July as all major housing indicators lost ground.  Furthermore, forward-looking surveys of builders and mortgage lenders point toward additional declines in single-family sales and housing starts in August, and large inventory overhangs of both new and existing units promise to weigh on both single-family and condo markets for some time.

• National average house price appreciation has slowed dramatically and is likely to be quite limited in the near term. The rate of nominal price appreciation should remain below trend for some time, and “true” house price appreciation will be even weaker.

• The current downswing in home sales and housing production should bottom out by the middle of 2007, although below-trend performances probably will run through most of 2008. These shortfalls from trend essentially compensate for the unsustainable above-trend performances of 2004 and 2005 as well as the weather-stimulated bounce in early 2006.

• The downswing in home sales and housing production will continue to detract from economic growth over the balance of this year and in the first half of 2007. However, stronger performances from other sectors, including nonresidential construction, should keep the overall economy on a solid growth path, and the mid-cycle sectoral rotation process may very well enhance the vitality of the economic expansion.

• The recent housing boom and the current downswing in housing market activity will have some adverse secondary impacts on the economy through consumer spending. However, neither a fading housing wealth effect nor a rising number of households subject to “payment shock” on adjustable-rate loans should be serious enough to derail the economic expansion.

• Our housing and economic outlook rests on a number of key conditions, and downside risks to the outlook are considerable. These risks include the possibility of spikes in interest rates or energy prices as well as large resales of homes back onto the markets by investor/speculators. There also are considerable uncertainties about the true dimensions of the risk facing homeowners with “exotic” ARMs, and there are major uncertainties regarding the size of the inventory overha ng in the market for new homes.
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Register Now for the Construction Forecast Conference — Only 5 Weeks Away!

Mark your calendar for October 25, 2006 and make plans to return to the Nation’s Capital for The NAHB Construction Forecast Conference. As always, this event is an outstanding opportunity to learn about economic trends, government policies and developments in the housing industry. A panel of nationally recognized experts will be on hand to discuss the outlook for the Economy and Housing, the Regional Housing Outlook, and the results from NAHB's recent surveys.

We look forward to seeing you in October for the 2006 Fall Construction Forecast Conference. However, if you can't attend the Construction Forecast Conference in person, you can take part through our webcast. Watch online a webcast of what's on the horizon for the housing industry at the semi-annual gathering of the country's premier economists and finance experts. Get the latest on economic trends, government policies, and developments in the housing industry.

Building Permits & Employment Data by Metro Areas

Building Permits and Employment data by States and Metropolitan Statistical Areas (MSAs), are available for download (Excel tables).


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NAHB's Chief Economist and the Former Sec. of HUD Will Address the Impact of Latinos on Housing

An upcoming teleconference — featuring NAHB Chief Economist David Seiders and Henry G. Cisneros, former secretary of the U.S. Department of Housing and Urban Development  ― will examine the state of Latino homeownership.

The teleconference will be held 2:00 p.m. EDT on Thursday, Sept. 21.

David Seiders will address the impact of Latinos on the overall housing market. 

Henry Cisneros will discuss the needs of the Hispanic market and how it is driving change in home and community design, as described in his new book, "Casa y Comunidad: Latino Home and Neighborhood Design."

The recent growth in the number of Hispanic home buyers, the nation’s fastest-growing minority, has shifted the mix of new housing production to reflect the requirements and preferences of Latino households. Hispanics make up 15 percent of  the total U.S. population and are projected to account for 18 percent of the nation’s population by the year 2020..

To participate, dial toll-free 1-800-860-2442 and ask for the “NAHB Latino Homeownership” call. For your convenience, presentations and reference materials will be available for download at, 10 minutes before the teleconference begins on Thursday.

For more information on logistics, please contact Liz Warin, at 800-368-5242, ext. 8495, or

Calendar: Data Releases for October 2006

Mark your calendar for all of  the housing industry key data and primary indicators for October 2006.

Click here to print the schedule of release dates for economic indicators. (Excel)

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USG Corporation Chicago

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