July 14, 2024

home constructionThe Census Bureau released the September data for new home construction

After falling in both July and August, housing starts and permits for new construction dropped again to multi-decade lows in September:

  • Housing starts fell 6.3 percent to the lowest level since 1991
  • Single family home starts fell 12.0 percent to the lowest level since 1982
  • Permits for new construction fell 8.3 percent to the lowest level since 1981

On a year-over-year basis, housing starts are now down 31.1 percent paced by a decline of 40.4 percent in the West and 32.5 percent in the South.

Permits are down 38.4 percent from year ago levels, led by a decline of 44.4 percent in the West and 37 percent declines in the South and Midwest.

In some ways, less housing starts is "good" not "bad".

There is too much housing inventory in the market caused by over-building. Less building allows the over-supply to be reduced in order to reach a balance of supply and demand which will have the effect of stopping prices from declining.

So, I would say this 'bad' news is really 'good' news in the long term.  san diego california real estate for sale

7 thoughts on “New Home Construction Falls

  1. “They’re not making any more land”, “It’s different in (insert your city)”, “everyone wants to live here”, “buy now or be priced out forever”…etc. These are all the lines that the sheeple have bought into from the real estate industry and all their “experts”. Bottom, line: this is the tip of the iceberg. People seem to forget history, and how it has a way of repeating itself. This is not a 1 year “slump”, this is an end to a cycle of people’s pie-in-the-sky attitude about real estate. I cannot wait to buy a house in 3-5 years, when prices are REALLY good. If you buy now, you’re overpaying. Think about it: is 20% off an item that is marked up 400% a good deal?

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  2. Thanks for this information. There have been a number of published studies or reports that there are expected to be more foreclosures in 2009 because of the high number of “exploding type” loans set to go off next year. So predicting exactly when this phase will slow down or come to an end is, therefore, very difficult. We have had a number of students advise they have loans which will “explode” in 2009 and 2010 (it hurts to see this, as most of these folks could have avoided these types of financing deals had they only bothered to learn something about real estate before diving into it without the knowledge they’d most likely have picked up in any good Real Estate Principles course.

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  3. Why do we think jeopardizing our country’s future for short term gain is a good idea? As a whole, Americans live beyond their means and rely on….credit. You can’t expect Uncle Sam to “fix” all of your personal finance problems. Time to let the chips fall where they may…

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  4. When I was buying a house about 4 years ago, you could not believe the zany loans I was offered. Interest only was big then…”all you need is to pay your interest then whatever you can afford on the principle.” Thank god I wasn’t foolish enough to do that; I’d be one of the many in foreclosure now.

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  5. When I saw how the housing prices were going up, up, up and most peoples’ salaries didn’t pay enough to afford them, I knew the market was going to crash three or four years ago. Some real estate dealers and owners were just so incredibly greedy. They ask for a sales price or rent not based on how much they really need to charge to recover their expenses and make a reasonable profit, but on getting the maximum money for themselves, without regard for the effect on society.

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