A bit of good news on the real estate front would be ideal right about now. Alas, today’s update on the housing market is disappointing once again.
Housing starts for August posted another hefty decline, the Census Bureau reports. The 6.2% drop in annualized starts last month vs. July isn’t the biggest decline on record, but it’s still hefty. More troubling is the fact that the declines just keep coming, as our chart below shows. Starts are now at a 17-1/2-year low.

Investors have been looking for a bottom in starts, and the bounce in June gave hope to some, including this editor, who thought maybe, just maybe, the carnage was behind us. But the optimism was premature–again. Today’s numbers reconfirm the bearish tone in housing.

Ditto for the number of new housing permits issued, which continued slumping last month as well, as our second chart below reveals. As with starts, the June bounce in new permits is now ancient history and the downward spiral rolls on. Privately-owned housing starts in August dropped more than 6% from July to a seasonally adjusted annual rate of 895,000 last month, the government advises. That’s more than 33% below the year-earlier figure.

The permits report is the more disturbing of the two data series since it’s a leading indicator. It’s message remains the same: the odds for a rebound in housing still look a ways off.
Indeed, home foreclosures are still mounting, and to the extent that the housing market looks for stability in the financial sector, well, one only need read the headlines in the last few days to realize that there’s still plenty to worry about on that front.
It ain’t over till it’s over, as Mr. Berra famously said, and this slump still isn’t over.


  1. D. Wiersma

    The preoccupation that people have with trying to either “predict” or “call” the bottom of the housing market is both entertaining to watch and professionally hazardous to engage in.
    In regards to the housing market and it’s subsequent stabilization – much less improvement – the preoccupation should be on the condition of the coincident indicators (i.e. job creation, improvement in credit access, improved savings rate, etc.).
    When we begin to see the coincident indicators begin to improve, locally, nationally or both, then one can responsibly begin looking for the proverbial “bottom of the market.”
    It might also be noted that once a market bottom is identified that does not mean market improvement is to follow, in fact, many market studies indicate that the market (any market for that matter) will likely “churn” for quite sometime before meaningful value appreciation will begin.

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