The housing news was mixed today. On one hand, new-home construction unexpectedly declined last month with housing starts falling by 1 percent from June’s level, to an annualized rate of 581,000, according to the Commerce Department data. Analysts had expected construction starts to increase to 596,000.
Total starts are down 38% compared with a year ago, with single-family starts down 23%. Starts are down about 74% from the peak at the height of the housing boom. In the past six months, the average change in starts has been 9.6% per month. In all of 2008, 906,000 housing units were started. In 2005, it was 2.07 million
There were fewer starts in three of four regions during July. Starts fell 16% in the Northeast, 2% in the West and 1% in the South. Starts increased 13% in the Midwest.
Completions of new housing units fell 0.9% in July to a seasonally adjusted annual rate of 802,000. It typically takes six to nine months for a home to be built. The number of homes under construction also fell, down 3.3% to 609,000.
On the other hand, construction of new single-family homes rose 1.7 percent compared with June, to an annual pace of 490,000 units. That is the fifth consecutive monthly increase in the single-family market. While construction permits were down overall, they rose 5.8 percent for single-family homes.
The housing market has been showing signs of a rebound in the last few months with increased sales, decreased inventory, and in some areas an increase in the median home price — all due to extremely low prices, affordability not seen since the 1970′s and the fed’s $8,000 first-time-buyer tax credit (that expires Dec 1).
The Northeast had the biggest increase in single-family-home construction, 14 percent, while single-family starts were up modestly in the West and down in the Midwest. In the South, which includes the Washington region, construction was flat, up 0.8 percent.
“Construction activity remains low, historically speaking. But evidence continues to mount that the worst of the declines for this cycle are behind us,” Mike Larson, real estate analyst at Weiss Research, said in a research note. “Still, that doesn’t mean we’re going to see a huge resurgence in construction. After all, buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010.”
Separately, the Producer Price Index — the prices paid by business to make goods — was down a whopping 6.8 percent over the past year and the biggest decrease in more than 60 years of record-keeping. It was also down .9 in July, compared to an increase of 1.8 percent in June, the Labor Department said. The good news is this news will give the Fed room to continue their “easing of money” to help keep rates low and homes affordable.
After 14 straight quarters of declines, many economists expect that residential investment will finally contribute to growth in the nation’s gross domestic product for the current quarter that began in July and runs through September. I happen to agree with them, as I am seeing alot more activity from investors taking advantage of this unbelievable market, buying super low from motivated banks and owners and then fixing and selling quickly in todays market.
Tonight I will be sharing my newest ways to take care of your “end game” with your deals, so you can sell your houses fast to the right qualified buyers and then close your deals and bank your profits without a hitch. I have been hearing from quite a few of my clients lately about their recent deal successes and confirmed yesterday that they will be on my “New Ways to Sell Your Deals and Bank Your Profits” Mastering Mini-Lab webinar/call tonight to share the details. I can hardly wait!
If you are not already registered, please call 800-310-7730 x2 right now to hold your spot…. Tonight is a Private Call and you must register in advance. We keep it small, so you can ask questions to me by phone throughout the call. I look forward to talking to you tonight! Call now 800-310-7730 x2 and see you tonight!
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