Recent readings on building permits and housing starts indicate that the new housing market is still hot, and is likely to remain so — at least for single-family homes.

In late September, the government reported that builders took out permits for new housing at a seasonally adjusted annual rate of 1.89 million, 5% above the revised July rate and 11% above the August 2002 rate. For the first 8 months of 2003, permits for single-family homes are 7% ahead of the 2002 pace, permits for building in the small (two to four units) category are 8% ahead. permit for large residential buildings (those with five or more units) are 1% below the year-ago level.

Although housing starts fell 4% in August from an upwardly revised level of 1.89 million units in July, the July number represented a 17-year high. Year-to-date starts are 8% ahead of 2002 in the single-family category, although they are down 19% and 3%, respectively, in the small and large multi-unit categories.