Housing starts, building permits step back
By Industrial Distribution Staff -- Industrial Distribution, 6/1/1999
THOUGH THE HOUSING BOOM that created a flush economy for distributors serving the construction market is still strong, the housing indicators showed signs of softening this spring.Demand for building permits, an indicator of future housing construction, fell six percent from February's rate -- the biggest monthly decline since January 1995 -- to an annual rate of 1.64 million in March, the Commerce Department reported. That slide followed a 2.1 percent drop in permits for February. However, the building permit rate for March was four percent higher than for March 1998.
Though lousy weather was blamed for a 1.3 percent decline in housing starts in March, that figure varied widely by region. Despite that decline, the rate was still 12 percent above the March 1998 rate.
Home starts were strongest in the Midwest, where they rose 12.7 percent, and in the West where they rose 7.9 percent. In the Northeast, the smallest market for new housing construction, home starts fell 28.9 percent; they fell 4.3 percent in the South, the largest market.
Distributors serving the residential construction market say business is still strong.
George Morgan, president of Kentec Inc., headquartered near Atlanta, Ga., says the winter was so mild that construction rivaled most summers.
"We came off a record month in March and we're looking for summer and fall to continue to be strong," Morgan says. "Our information indicates that housing starts permits are off slightly, but there's so much momentum right now that it's hard to feel. That's really the entire Southeast market, not just the Atlanta market. Charlotte, Nashville and Birmingham are all very strong."
Tom Meyer, president of Montague Tool Induserve Supply, in northwestern New Jersey, believes the region's construction market is closely tied to the financial market.
"There's a lot more activity here than there was several years ago and I think it will only continue as long as the interest rates stay down," Meyer says. "There are a lot of people who invested in the stock market in the early 90s and are feeling pretty good about their financial situations. People are looking at [remodeling or building] as a portion of their newfound wealth, and not as a good long term investment anymore."
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