NYT: New Housing Starts Fall, as Do Permits for Building

[DeepModem Mom]

New Housing Starts Fall, as Do Permits for Building
By VIKAS BAJAJ
Published: November 17, 2005


New home construction dropped to its slowest pace in five months and permits for building had their biggest monthly drop in almost six years in October, the government reported today, providing more evidence of a housing slowdown.

Though not yet conclusive, a stream of reports in recent weeks strongly signals that the nation's long housing boom is coming off spectacular peaks and may be headed for far slower growth or even a decline.

A monthly report from the Commerce Department today showed that builders started home construction at an annual pace of 2.01 million in October, down 5.6 percent from September. Local authorities issued 6.7 percent fewer building permits in the month, at an annual rate of 2.07 million.

Compared with this time last year, housing starts were down 2.3 percent. In October 2004, housing starts rose 7.9 percent. And housing permits were down 1 percent from October last year.

"What we are now seeing finally is enough of the housing indicators suggesting that the cooling process has begun to be a believer," said David Seiders, chief economist of the National Association of Home Builders....


http://www.nytimes.com/2005/11/17/business/19cnd-econ.html

[joeybee12]

1. About time...I'm surprised it's been going for so long...

...the job market is weak, wages are declining, and still home prices were skyrocketing.

[DawnneOBTS]

2. There are...

four houses on my street alone that are for sale. Nobody's buying them. More are vacant. Over 100 are for sale in the unincorporated area in which I live in (Florida).

[applegrove]

3. They have to build smaller houses and that confuses them. What with

the cost of aircon & heating oil - the market has fallen out for those echo chambers previously known as "Housing Starts". The builders are confuses.. "why how can we build houses if we do not net $1 Million?". Leave them alone. They need to think!

[Yavin4]

4. It's Called Rising Interest Rates

We were in a period from 2001 to 2004 where interest rates were at historical lows. That meant that anyone with a pulse could secure a mortgage. With more qualified buyers, housing prices shot up, and new construction tried to keep up with demand. This was a very unsustainable period. In fact, Greenspan deliberately manipulated interest rates to help Bush win re-election.

Now, we are in an inflationary period because of gas prices and the housing bubble. Interest rates are heading upwards. This means less people will qualify for mortgage loans at higher rates. Less qualfied buyers means less homes will be sold, and less new housing starts.

The cherry on top of all of this mess is that the economy is not and has not been producing enough private sector jobs to raise the income levels of most Americans. Most of the new jobs created during Bush's tenure are low paying, temp jobs which may make the UE rate look good, but are not helping people work their way out of poverty.