With the Census Bureau’s release of the April housing data, perhaps we should put the housing starts numbers in context. Most of my readers are now aware that I’m neither a housing nor recovery “cheerleader,” that is, I don’t believe that the economy is close to rebounding to the levels of three years ago. And I’m sometimes criticized for my “negativity” and encouraged to put a more positive “spin” on my projections. My intent, however, is to present the most accurate picture possible to help consumers and those in the real estate industry make prudent choices.
Certainly there is some positive news in an increase in housing starts, but we only have to compare where we are now with the numbers of three years ago to see that we’re far from a housing recovery. And while single family housing starts for April (an annual rate of 593,000 units) were almost 11% above the rate for March, building permits for April (606,000) declined by about 11% below the March annual rate of 685,000.
What this tells us is that builders anticipate a drop in sales with the expiring Housing Tax Credit, and will therefore be starting fewer homes. Ultimately, that’s positive news and will help to remove some of the excess inventory. However, I expect new home sales to continue at below average numbers until the foreclosure and short sale inventory is reduced and the economy begins to add significant numbers of new jobs. A quick review of the graph helps put the housing starts numbers in context.
Thanks to Calculated Risk for the graph.
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