As further evidence that the bottom of the housing market has likely not yet come, Housing Starts fell in September for the third consecutive month. Last month, Housing Starts dipped 6.3%, to a seasonally-adjusted annualized rate of 817,000 units. That's an 18-year low!
Since September, 2007, Housing Starts across the U.S. have fallen 31%.
Will the decline in new home sales positively impact stagnating sales of existing homes in many Metro Markets, including Chicago? Unsure, since the true impact of the new Financial Rescue Package has not yet been implemented, and its mid-to-long term affect is not yet known.
In September, Building Permits fell across the country by 8.3%, to a 786,000 annualized rate. An indication of future home construction, New Building Permits have also fallen three months in a row.
Confidence by Home Builders also fell to an all-time this month. According to the National Association of Home Builders, its monthly Confidence Index slid to 14 during the October survey, completed last week. The September Index was 17.
Last August, sales of new homes plunged by 12% versus July, according to U.S. Commerce Department Statistics released the end of last month. New Home Sales has dipped 35% since last August, the Commerce Department says.
Many potential buyers, frightened by the weakened U.S. Economy, and expecting home prices to fall even further, are putting off their new home purchases. Fewer sales means continued high unsold inventory, leading to a further fall in prices. Many economists feel this negative trend will continue, likely into the First Quarter, 2009.
"Builders are just trying to hang on through this cycle," said Patrick Newport, an Economist at Global Insight. "They're actually adjusting very quickly to what's happening," but it could be weeks before they feel any relief -- such as easing mortgage rates and increased lending -- from government measures to address the global credit crisis.
If the measures are successful and the credit market improves, Newport sees a possible housing market rebound in mid-2009.
See our post today @ BlogChicagoHomes.comfor more info, as well as a link to Brenda J. Cronin and Jeff Bater's story in Saturday's online Wall Street Journal.
DEAN & DEAN'S TEAM CHICAGO