National Home Builders "Lookout" Outlook

NAHB forecast: Florida will see steepest drop in starts
Nationwide starts expected to drop 24.8% this year
Wednesday, October 24, 2007Inman News



A forecast report released Tuesday by the National Association of Home Builders projects that the state of Florida and metro areas within the state will experience the steepest declines in housing starts this year compared to last year.

Nationwide, total housing starts are expected to drop 24.8 percent this year compared to last year and fall 11.9 percent year-over-year in 2008, while rising 12.5 percent year-over-year in 2009.
Housing starts in Florida are projected to fall from 198,900 in 2006 to 103,300 this year, a 48.1 percent drop, the builders group reported.

And Florida is home to nine of 10 U.S. metro areas with the sharpest projected drop in housing starts from 2006 to 2007.

The Sarasota-Bradenton-Venice, Fla., metro area topped that list, with a projected 67.5 percent decline this year compared to 2006. Next on the list was the Cape Coral-Fort Myers, Fla., metro area, with a 61.4 percent projected drop.

The other metro areas on the top 10 list are expected to see a 50 percent or greater slide in housing starts from 2006 to 2007.

The Detroit-Warren-Livonia, Mich., metro area is the only non-Florida area in the top 10 for housing market declines, with a projected 50.5 percent drop.

Housing starts are expected to fall 39.4 percent in Nevada, 38.5 percent in Alaska, 36.6 percent in Minnesota, 31.9 percent in Illinois, 28.7 percent in Wisconsin, 27.8 percent in California and Missouri, and 25.8 percent in Ohio this year compared to last year.

Only one other U.S. metro area tracked in the NAHB report, the Louisville, Ky., metro area, is expected to experience a gain in housing starts this year. That market area is projected to rise 3.7 percent, from 5,400 starts in 2006 to 5,600 starts this year.

Washington, D.C., is expected to see a 72.2 percent decline in starts in 2009 compared to 2006, after projected year-over-year declines of 22.2 percent this year, 50 percent in 2008 and 28.6 percent in 2009.

NAHB stated in a forecast overview that all housing markets "will suffer from tighter lending standards but areas of the country that have high concentrations of subprime (adjustable rate mortgages) will suffer a second hit because these loans have exhibited much higher default rates, particularly the most recent vintages. Defaults and foreclosures in these markets could bring significant numbers of housing units back onto the market exacerbating the problem of already high unsold inventories."

Also, high concentrations of subprime ARMs, coupled with economic weakness in some parts of the Midwest, "will slow recovery, particularly in certain markets in Michigan, Ohio and Indiana," the overview states.

"Although there was some weakening in the most recent permit numbers, many of the stronger markets in the country are at or above pre-boom levels of production. These markets include MSAs in the Southeast, Texas, Pacific Northwest, Mountain states, and the Dakotas, where subprime ARM exposure and speculative activity have been limited."