Current Events, Foreclosures, Homebuilders, Housing Starts

Single family home starts hit 17-year low. Again!

From CNN:

HomeĀ building fell sharply in July to a 17-year low, according to government readings released Tuesday that offered fresh signs that the battered real estate market has yet to hit bottom.

Housing starts plunged 11% to an annual rate of 965,000 from a revised 1.084 million pace in June, according to the Census Bureau report. Economists surveyed by Briefing.com had forecast starts would fall to a rate of 960,000.

Permits - often seen as a sign of builders’ confidence in the housing market - tumbled 17% to an annual rate of 937,000 from a revised 1.138 million in June. Economists had forecast that permits would come in at 959,000.

The sharp percentage drop from June was due partly to a jump in multi-family home starts and permits during that month. Single-family home starts and permits slipped only slightly from the June level. But the single-family starts were also at a 17-year low in July, while single-family permits fell to a level not seen since the 1982 recession, reaching a rate of only 584,000 homes in July.

The sharp fall in building activity suggests that home building will continue to be a drag on the economy in the second half of 2008. Earlier this year, many economists hoped that building activity would bottom out this summer and start to show signs of improvement.

Stop me if you’ve heard this one before. Single-family home starts hit a 17-year low. Last month? Well, that was a 17-year low too. And the month before? You guessed it. It’s a broken record of doom and woe for the homebuilders.

Still, the latest numbers show that, even pulling back as much as they have, it still might not be enough.

While the homebuilders are shutting down as many developments as they can, the weak demand from homes - what with all of those foreclosures, and, in case you haven’t heard, mortgages are a little tough to come by - the homebuilders are still completing more homes than they’re selling. They’re pulling back (to repeated 17-year lows!), but it’s still not enough.

All this means that homebuilders are probably a long way off from seeing a recovery in the new home market - which may explain why homebuilder’s confidence remains at an all-time low.

speak up

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