Housing starts are down. What does this actually mean? The seasonably adjusted number of new construction homes based on permit applications has decreased. Clearly the two new home construction permits my investors and I are applying for next week were not taken into consideration. So a recovery might be on its way. Seriously, though, all the numbers are extremely difficult to use for personal purposes. We're talking about national numbers, and we know that all markets are different, and if there's one thing anyone following this blog should have learned in the past six months, it's that no one really seems to know what's happening. You can sit on the sideline, read your data, wonder where prices are going, wonder where interest rates are going, wonder how many permits were pulled, or you can find a house that makes sense for you now, lock in a historically low interest rate, and stop hiding under the covers. And remember, a rise in interest rates from 4.25% to 5.25% will more than negate any monthly savings you might have in your mortgage payment if you wait for prices to drop 10%. If prices don't drop and interest rates go up, which most observers think they must, you'll be kicking yourself for not locking in at a ridiculously low rate now. And now on to those inscrutable statistics.
---
RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.
Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.
Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.
View original article: http://rismedia.com/lowes/8355/11190
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
No comments:
Post a Comment