Construction of new homes and apartments fell to its lowest level in 17 years last month, showing the country is still gripped by a severe housing downturn that has triggered billions of dollars of losses and is reshaping the structure of U.S. finance.
The Commerce Department reported Wednesday that housing construction dropped a surprise 6.2% last month to a seasonally adjusted annual rate of 895,000 units. That's the slowest building pace since January 1991, another period when housing was going through a painful correction.
The decline is larger than the 1.6% drop analysts expected and showed weakness in all the country except the West. ...
For August, the 6.2% drop in housing construction reflected a 1.9% decline in single-family construction, which fell to an annual rate of 630,000 units. Construction of multifamily units fell by 15.1% to an annual rate of 265,000 units. ...
Building activity was down in all parts of the country outside of the West. Construction fell by 14.5% in the Northeast and was down 13.6% in the Midwest and 7.4% in the South.
All the declines left construction activity 33.1% below the level of a year ago. Analysts believe that construction will continue falling for many more months as builders struggle to reduce the backlog of unsold new homes in a market that continues to slump.
Building permits, considered a good indicator of future activity, dropped 8.9% in August to an annual rate of 854,000 units.
Wednesday, September 17, 2008
Housing Construction Hits 17-Year Low
CNN Money reports:
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This is terrible news for anyone looking to buy a house ... or rent for that matter. The housing age population hasn't stopped increasing as a function of grown children wanting to move out of their family homes or of immigrants coming to the country. Yet, here we have a firm halt in the numbers of new housing units being made available to accommodate all the additional demand. That can only mean one thing: increased prices on existing stock ... both in 'fair market value' and in 'rent' value.
ReplyDeleteCombine this with the devaluing of the dollar caused by all the recent "printing of money" by the government (i.e., selling Treasurys) to solve the financial crises ... and voila, we have a situation I sorely wouldn't want to be in if I were someone without a locked in mortgage cost.
And some people actually believed it was better to wait than to lock in? I guess we all know better now ... other than a few deniers ...
That's pretty funny, Lance. What planet did you say you are from?
ReplyDelete"This is terrible news for anyone looking to buy a house ... or rent for that matter."
ReplyDeleteBut that won't have any impact here, right?
Although the cost of building materials has increased over time, the real cost is for the land the home sits on. The land is worth much more than the building materials.
ReplyDeleteProperty Management – Propety Sourcing, Property Acquisition, Buy Property, Sell Property, property repossession