Surprise Slump Hits Home Building
Construction of new homes unexpectedly dropped nearly a third last month compared to a year ago, latest Commerce Department figures show. How surprised are you that building of new homes appears to have declined that much?
"The pace of new residential construction fell unexpectedly by 10.6% to a seasonally adjusted 529,000 annual rate compared with the prior month and a 30.7% drop from October 2008, the Commerce Department said," the Los Angeles Times just reported.
CNN noted that this placed home construction at its lowest point in 6 months:
"The numbers stink," said real estate analyst Mike Larson of Weiss Research. "They're negative across the board."
That weakness included the number of building permits issued in October, which fell to seasonally adjusted annual rate of 552,000. That was 4% below the revised September rate of 575,000 and 24.3% below the October 2008 estimate of 729,000.
Agence France-Presse noted that "Permits to build new homes, a leading indicator of the sector, fell 4.0 percent to an annual rate of 552,000 in October from a revised rate of 575,000 a month earlier."
How important an indicator of our nation's economic health do you think these latest figures might be?
AP:
Construction of new homes unexpectedly plunged last month, as builders waited to see whether lawmakers would extend a tax credit for homebuyers.
The results show how much the housing market has been relying on government support for its fledgling recovery. The tax credit of up to $8,000 for first-time owners was due to expire on Nov. 30, but Congress voted to extend it earlier this month and expand it to more buyers, after intense pressure from real estate agents and homebuilders....
Reuters just reported:
"The trickle-down effect of the housing number is going to be amazing," said Dan Cook, senior market analyst at IG Markets, Chicago. "It's likely that more construction crews will get cut after this, and the supplier who supply those crews will be hurt as well. This is not good news at all."
A separate report from the Labor Department showed the Consumer Price Index rose 0.3 percent, a touch above market expectations for a 0.2 percent increase, after rising an unrevised 0.2 percent in September....
And from the Seattle Times within the hour:
The budding economic recovery is getting little help from the home building industry, which normally creates jobs and boosts growth as a recession ends....
>> How surprised are you that building of new homes appears to have declined that much? <<
Show me the prospective buyers. Ones who are ready, willing and able to buy.
The existing home stock is depressed by foreclosures against many "nominal" homeowners who simply cannot afford to service their mortgages and other expenses of homeownership.
New construction is largely speculative and why would a developer now want to be expanding inventory without a viable market to sell into?
On a local basis, there are sure to be some locations that are flourishing and have a demand for new housing. But, averaged nationwide, I don't think that we have a shortage of new homes with a surplus of the aforementioned ready, willing and able buyers. So, if I were the typical developer, I would be "keeping my powder dry," rather than sinking my capital into new construction that might take many months, at best, to sell.
Best regards, 4merCL
It is not surprising! TARP was supposed to initially stabilize home price levels and limit the damage of home foreclosures to the industry, but was redirected to reliquify the large finanancial institutions. Supply/ demand forces are still deflating the housing market ergo the economy. Until the job market comes around, will the housing figures improve.
Obama needs to come out with directed investment taxe credits which encourage all businesses to spend the corporate cash being held for planned expansion/redevelopment ergo jobs.
It may not be wise to invest in a home now or in the future. Pending legislation in Washington will require that any house being sold in the future will be inspected by a goverrnment official. He will issue a list of items that must be completed to bring the building up to energy efficiency standards before it can be put on the market. When the house is up to standard, a "label" will be issued, and no house can be sold without that label of approval. All houses placed on the market must meet energy efficiency standards, and the standards will improve from time to time. Looks like the best way to handle it is to live in a house for some time, then just walk away from it. Government mortgage? Let them fix it!
Don't believe me? It's all in Google!
>> Don't believe me? It's all in Google! <<
In this case, Ben, Google is like the cops raiding a bar in the "red-light" district. The good girls get swept up with the bad.
Or, stated a little differently, just because something might be found in a Google search does not make it factual, truthful or accurate.
Bringing a house up to code before it is sold is nothing new! If fact, it is near impossible to get a mortgage if it is not. It is one good reason to get a whole house inspection before buying.
Bob
>> Bringing a house up to code before it is sold is nothing new! If fact, it is near impossible to get a mortgage if it is not. <<
I could add, Bob, that in the state where I live, it is not only the issue of getting a mortgage, but that state law requires certain compliances in order for a property to be sold. Most notably that septic systems meet certain standards.
That said, I reviewed my post to which you were purportedly responding, and it said nothing about building codes, mortgages, or home inspections.
What it did address was a prior poster's suggestion that the ability to find something "on Google" [i.e. using the Google search engine] made that something true, reliable, or accurate. And that just ain't so. If there is misinformation or junk science or outright scams out there in cyberspace, then given the relevant search terms or keywords, Google can find and return it.
This is what I was responding to in building codes etc. And yes, just because it is on Google or the internet don't make it so!
This is what I was responding to in building codes etc. <<
I don't recognize your backquote as being anything that I said. If it is to be found upstream, your response should have been directed to its author.
