New Construction Falls 54%: Less is More

Another brutal number:

Building permits in April fell -50.2% (±1.4%) below the April 2008 rate. The monthly seasonally adjusted annualized rate of 494,000 was -3.3% (±2.3%) below the (revised) March rate of 511,000.

Single-family permits were up 3.6% (±2.2%) above March figure of 360,000, but fell 42% below April 2008.

Privately-owned housing starts in April were (seasonally adjusted and annualized) 458,000. This is 12.8% (±13.0%)* below the revised March estimate of 525,000 (Note that the high error number means it is not a statistically significant finding). The year over year number was down 54.2% (±6.0%) below the April 2008 rate.

As bad as these numbers sound, they are actually a net positive. More inventory is a bad thing, so less starts and permits is a good thing. . We still have several million foreclosures possible over the next 3 years, and that will add to supply and drive prices further down. Int he evnet that prices do move higher somehow, expect to see millions of shadow inventory — homes bought on spec or to be flipped — to hit the market.

New Housing Starts: Any Change in Trend Detectable?


via Barron’s Econoday


MAY 19, 2009 AT 8:30 A.M. EDT

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