New home construction market far from recovery

Posted by Annalisa Burgos | March 18, 2009

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After months of doom and gloom headlines, the housing market finally had a positive one: “Housing Starts Leap a Surprising 22.2% in February.” That’s the biggest gain in nearly two decades. Stocks of homebuilders Toll Brothers and Pulte Homes and home improvement retailer Home Depot shot up on the news, leading a nice market rally. And news outlets even started using the word everyone wants to hear — recovery.

But hold on. This”positive” housing news isn’t exactly the miracle turnaround we’re waiting for. Dig deeper and you’ll find that the new home construction market is simply stabilizing after a 17% plunge in January and three straight months of double digit drops. Housing starts were at a record low in January, so this recent surge is just the market gaining back some ground. Even the National Association of Home Builders downplayed the news in their press release:

“Nationwide housing starts turned upward for the first time in eight months this February, posting a 22.2 percent gain that was due primarily to a big bump on the often-volatile multifamily side, according to numbers released from the U.S. Commerce Department today.

“While welcome news, this gain only reflects a modest rebound from January, which was the worst month in history for new-home production,” said National Association of Home Builders (NAHB) Chief Economist David Crowe. “The majority of the gain was due to characteristic volatility on the multifamily side, while single-family housing starts were up just over one percent for the month.””

Year over year, new home starts are down 47%, so the industry has quite a long way to go before we can even think “recovery.” Market analysts and economists expect the housing market to continue to hurt through next year, with people losing their jobs, foreclosures flooding the market and inventory growing.

The good news is that homebuyers can great deals on the new homes already on the market. Builders are offering enticing financial incentives and upgrades to unload their excess inventory.

4 Comments

Green Home Appliances

March 18th, 2009 at 8:02 pm

I read a similar article today about the housing market in Florida. Looks like we aren’t all doomed after all!

Miami Beach condos

March 26th, 2009 at 4:15 pm

Great article Annalisa, you can’t always trust statistical informaiton, especially when it is skewed by personal interest.

New Construction Houston Texas

April 1st, 2009 at 1:08 am

Finally, we see the light:)

home builder communities

April 30th, 2009 at 3:09 am

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