Builders are on track to construct the fewest single family homes in history this year. Total housing starts in Julywere down 1.7 percent, month to month, which may not sound like a lot, but when you break the number down, you see the problem.
Single family starts were down 4.9 percent, while multifamily starts rose 6.3 percent. Rental demand continues to rise, as consumer confidence in homeownership was decimated yet again by the recent debt turmoil in the economy.
I am reporting these numbers from a construction site. Mid-Atlantic Builders of Rockville, Md., is putting up the last phase of a large single-family development out in Bowie, Md., which is about 15 minutes outside the D.C. Beltway. They are a midsized builder, about 40 to 50 homes a year, which is about a third of the business they did just five years ago.
They are now smaller, leaner, but surviving thanks to their location near D.C., where unemployment is low, relative to the rest of the country. Business was even starting to pick up last winter, according to executive vice president Stephen Paul.
"We started what we call the spring market in February. We started out very strong, we had a good February, March, even into April," he said. "What started to cause consumer confidence to wane was the escalation of gas prices, the debt issue with the government, and what's going on in Europe."
In other words: Confidence.