NEW HOME CONSTRUCTION CONTINUES DOWNWARD TREND in September!

By
Real Estate Agent with Dean's Team - Keller Williams Realty Partners Chicago IL

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

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Ambassador
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Dean, I had seen this trend you pointed out. Short term bad. Long term ok. For those builders that survive the downturn they will be stronger, and the inventory of pre-owned homes can thin out.

Oct 19, 2008 04:30 PM #1
Rainer
179,681
Erik Hitzelberger
RE/MAX Alliance - Louisville REALTOR-Luxury Homes - Louisville, KY
Louisville - Middletown Real Estate

Dean - I'm not sure what it is going to take for buyers to stop letting fear paralyze them.  In a few years thousands and thousands of people are going to be thinking about the opportunities that they missed.  What a shame!

Oct 19, 2008 04:37 PM #2
Ambassador
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Dean,

Be careful. There is a huge bunch of members who preach not to see the obvious and scream that the market is great, which, for some reason the rest of us do not see. Sometimes I even think that I am the only one who is watching the so called declining market.

I guess they think that if they keep saying "honey", the bitter market will turn sweet.

God save hyper-optimists and send them honey...

Oct 19, 2008 04:39 PM #3
Rainmaker
1,005,518
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Dean:  I did a post on this very thing a few days ago.  The last time it was that low... was in 1991.  Gee... some guy named Bush was president.  Hmmm.  Then the Democrats moved in and rescued the country... balanced the budget, and ran up a tremendous budget surplus.  What a concept.  Maybe we can make that happen again starting in a few weeks.

Oct 19, 2008 05:15 PM #4
Rainmaker
368,263
Dean Moss
Dean's Team - Keller Williams Realty Partners Chicago IL - Chicago, IL
Dean's Team Chicago IL Real Estate Team

Karen -

Thanks for the comment!

Have you seen the movie "W."?  The usual Oliver Stone exageration - but perhaps not too much.

Sorry, you far-right-of-center readers!

Folks -

Indeed, the New Construction Market has fallen fast and low - perhaps because it went up so quickly during the boom.  Soon, we hope, things will stabilize.  But it might take a little while longer for the builders.

DEAN & DEAN'S TEAM CHICAGO

Oct 19, 2008 10:10 PM #5
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Dean Moss

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