Housing starts continued to fall in October, decreasing by 11.7 percent over the month. This brings the annualized sales pace to 519,000 units, the lowest level since April, 2009. Housing starts have been very volatile over the past few months; however, this has mostly been due to large swings in multi-family unit starts. In October, this category fell 43.5 percent. Single family starts fell by a much lesser 1.1 percent. Single family starts have essentially been flat for the past four months at an annualized pace of around 440,000. Still, this is a very slow pace and shows that building activity remains depressed.
“The excess inventory of existing homes continues to be a drag on housing starts. Until this inventory is absorbed, housing starts will stay at near historic low levels.” said Jim Chessen, ABA’s Chief Economist. Both single family and total housing starts have been in a range for this past year that is lower than any period since prior to WWII.
From a year prior, total starts were down 4.5 percent. Single family starts were down by a lesser 1.1 percent when compared to a year ago.
New building permits, which tend to lead future starts, rose by a modest 0.5 percent over the month. Single family permits rose 1.0 percent, which was the first increase since March. Meanwhile, multi-family unit permits continued to decline, falling 0.7 percent.
With the excess inventory home builders will continue to hold off projects. Many developers and builders have tons of shovel ready projects and are just waiting for the market to clear. But with housing crisis well into its third year the demand is just not in the market. It is clear that housing market will no longer be as dominate as it once was in the economy because there is no longer the demand the mid 2000's.
ReplyDelete