Money CNN details:
Initial construction of U.S. homes edged lower in July following a surge in the previous month, according to government figures released Tuesday. The report had some modest indications of stabilization. "A mixed bag this time around," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.
Housing starts fell to a seasonally adjusted annual rate of 581,000, down 1% from a revised 587,000 in June, the Commerce Department said. Economists were expecting housing starts to increase to an annual rate of 599,000 units, according to a consensus estimate gathered by Briefing.com.
THIS IS A GOOD THING.... Why? Let's go to David Rosenberg.
With every 1 in 8 Americans with a mortgage either in arrears or in the foreclosure process; 1 in 4 homeowners “upside down” on their mortgage; 1 in 6 either unemployed or underemployed; and 1 in every 7 housing unit in the United States sitting vacant right now, it will be interesting to see exactly what sort of recovery we end up with. These numbers we just cited are straight out of the twilight zone.In other words, why build something we don't need? The lower the level of housing starts, the faster we work off this excess inventory.
Source: Census
Jake,
ReplyDeleteIn July there were 55.6 thousand new home starts. Far and away the lowest number of starts for July since record keeping began in 1959! By comparison, July 2008 was the second worst July on record with 86.7 thousand starts.
http://www.census.gov/const/startsua.pdf
In other words, why build something we don't need?
Why? To create massive amounts of credit in order to garner huge bonuses, that's why! It's not like there was ever any actual end demand for all these houses that were built during the bubble. *sigh*
Very good contrary thinking Jake. I'm with you 100% on that.
ReplyDeleteCould never understand why we want more housing construction when the inventory build was rediculous.
Government stimulus was directed to housing construction in some countries which just gets even sillier.
Jake,
ReplyDeleteThe ratios are nice, but can you provide the "whole picture", to put the extent of the excess in perspective? What I mean is, what are the following numbers, which are needed to go along with the housing starts data to create a complete "system" view:
1) Current Inventory (# of units occupiable)
2) Occupied Inventory (# of units cccupied)
3) Inventory "death" (# of units that are scraped/raized annually)
4) Demand (future number of units that are needed based on age demographics and net immigration
5) SFHs and multi-family detail would be great.
Thanks, I know I'm asking a lot!
Seahome