December 20 2010 (Shirley Allen)
Housing starts continued to be at rock bottom lows based on the current housing report from the Commerce Department. Housing starts in November were 3.9 percent higher than October but 5.8 percent lower than a year ago.
Future housing starts may decline though as building permits, a sign of future construction activity, dropped 4.0 percent compared to October and are down a whopping 14.7 percent from November a year ago.
“The construction industry is limping along toward the end of a lousy year,” said Mike Larson, a housing industry analyst for Weiss Research.
High inventories of existing homes, including many repossessed properties coming onto the market at low, low prices, has played a significant role in the weakening of the market share that would normally go to the new construction.
That should only worsen with as many as 12 million mortgage borrowers in danger of losing their homes to foreclosure over the next two years. If even a fraction of those repossessions occur, it will flood the housing market and further lower demand for new homes.
The Commerce Department reported that the number of new private home starts rose in November to a seasonably adjusted annualized rate of 555,000, compared to a seasonably adjusted annualized rate of 534,000 in October and 589,000 in November of last year.
One glimmer of hope was a seven-month high in starts for single-family homes, which came in at 465,000, up 6.9% from October. However, there was a drastic fall in multi-family starts.
Tags: housing starts, building permits, construction industry, commerce department, new homes, existing homes, repossessed properties, new construction