Housing starts in the U.S. unexpectedly rose for a second month in March, bolstering expectations the worst housing slump in 15 years may be easing.
Builders broke ground on new homes at an annual rate of 1.518 million last month, an increase of 0.8 percent from February, the Commerce Department said today in Washington. Building permits, a sign of future construction, also rose 0.8 percent.
Unusually warm temperatures last month encouraged builders to start work on more homes, along with signs that demand is starting to firm as prices moderate. The Federal Reserve predicts the economy will pick up in the course of the year as the drag from housing diminishes, while warning that a wave of mortgage defaults poses a risk to their forecast.
Let's coordinate this report with a few other data points.
1.) Homebuilder confidence is low
The National Association of Home Builders/Wells Fargo index of sentiment fell to 33 from 36 in March, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.
2.) There is already an 8.1 month supply of new homes on the market. This number has increased from 6.1 months in December 2006. According to the same report, the actual number of new homes on the market has increased 1% over the last year, from 538,000 to 546,000.
Is this really the time to be increasing inventory?
3 comments:
Hardly an increase in inventory. Completions are down 26% from a year ago. On an annualized basis that will take nearly 600k units off the market this year compared to last. To use a Bonddad phrase, 'that's a ton of houses not being built'
Cheers
Well, somebody must do something with the loans they've already taken out but can't find an alternative use for. I suspect a number of builders might believe it's best to keep their construction teams together at some minimal level and hope to ride the storm out. This group probably believes that if they were going to fail, how much further could the drop be in using the line of credit they were already committed to. In for a penny, in for a pound, as some folks say.
Hi Bonddad,
Thought you might find of interest.
Seems to indicate a disturbing disconnect between stock prices and the value of the dollar.
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