By now the routine is familiar–and increasingly painful. The government updates the state of the housing market and a bevy of negative numbers fly by. Today’s news on this front is, alas, more of the same, reminding that the primary source of the current economic and financial ills is still correcting and therefore throwing off bearish shock waves in all directions.
New housing starts dropped 6.3% in September from the previous month, the Census Bureau reports. That’s a lesser decline than August’s 8% drop, although as our chart below reminds that’s cold comfort given the persistent declines that have been battering this sector almost nonstop since early 2006.
It’s no better for new housing permits issued, and that casts a pall on the future. As our second graph below shows, this forward-looking measure remains under enormous strain too, virtually assuring that housing construction and related activity will continue to shrink for the foreseeable future. The 8.3% drop last month in new permits is steep and only slightly below August’s 8.5% tumble, suggesting that the negative momentum has still got its foot on the industry’s neck.
The best we can hope for at the moment is that a bottom in the housing market is near. Forget about a rebound–that’s probably a year or two off at the earliest. At this point a material slowdown if not an end to the bleeding is housing is priority one. It’s unclear what policies will bring that about other than to let the excess in the housing market unwind naturally. Suffice to say, government intervention with an eye on moderating the pain will be ongoing on several fronts, but getting some traction relief remains a trial-and-error effort still.