U.S. housing starts fall sharply in July

[mahatmakanejeeves]

Source: Reuters

August 18, 2021
8:43 AM EDT
Last Updated a few seconds ago

United States

U.S. housing starts fall sharply in July
Reuters

3 minute read

WASHINGTON, Aug 18 (Reuters) - U.S. homebuilding fell more than expected in July, the latest indication that surging construction costs and home prices continued to constrain the housing market early in the third quarter.

Housing starts dropped 7.0% to a seasonally adjusted annual rate of 1.534 million units last month, the Commerce Department said on Wednesday. Data for June was revised up to a rate of 1.650 million units from the previously reported 1.643 million units.

Economists polled by Reuters had forecast starts would fall to a rate of 1.600 million units. Permits for future homebuilding rose 2.6% to a rate of 1.635 million units in July.

The report followed on the heels of a survey from the National Association of Home Builders on Tuesday showing confidence among single-family homebuilders dropped to a 13-month low in August because of higher material costs and home prices, which are cooling demand for houses. read more

Read more: https://www.reuters.com/world/us/us-housing-starts-fall-sharply-july-2021-08-18/

[Crowman2009]

1. I guess the money launderers are taking their money elsewhere.

[Anon-C]

2. ...

[Farmer-Rick]

3. They removed the mortgage interest tax deduction

The economy has crashed for everyone except for the filthy rich. The numerous tax give aways to the filthy rich are now being paid for by the ever shrinking middle class. And the banks have gobbled up over a third of single family homes in the last crash, leaving little to choose from and overpricing the remainder.

So, yeah the housing market was sitting on quicksand at best. It was due for a fall. I'm surprised it's not worse. What with global warming ensuring the ever present danger of burning down the house.

[cinematicdiversions]

4. Um this is not going to cause housing prices to fall.

This will contribute to the increase in prices.

Builders I know state both personal shortages and supply chain shortages (need a sink that could be three months that tile another six months.) Are bigger contributors now then demand or wood prices.

[Farmer-Rick]

6. Less demand. Lower prices

Yeah there was a temporary increase due to the last crash and banks gobbling up houses.

But now you get no deduction and your house is at risk of burning down in so many more locations. That discourages buyers.

But yeah, I see your point. There's little building going on because you can't get supplies.

I can't even get a handy man to work on my drywall and minor building issues.

[inthewind21]

12. Don't let them fool you

They are gouging. And they want to continue to gouge. Builders are writing clauses in contracts saying if their cost go up the price of the house goes up, so you are under contract without knowing what the actual price will be. As for cost increases, yes they are happening , lead times have increased, slightly. Builders don't wait until they start to build to get the materials. There is a years worth of work to do before you even send out the workers to level the lots and put in streets. They negotiated all materials at least a year BEOFRE they ever broke ground. It's not like a GC says "we're building this house starting next Monday someone run out get all the lumber, hardware fixtures etc this weekend and have it all ready. This is the industry I work in. It's not the "desperate for material" they claim It's greed pure and simple! Now they are all sad because their heist is coming to a screeching halt.

[ScratchCat]

7. This is due to supply chain disruptions

and not decreased demand due to price. Builders simply can't build as fast as they want because of the lack of materials. This is being misunderstood as some sort of "decline" when it is no such thing. There are bidding wars in virtually every market in the US and there are people willing to pay more than the highest price someone could get last month.

There is no "cooling on the demand for housing". The article is completely wrong on that account.

[mahatmakanejeeves]

8. The quote refers to a different survey, which I will link to right now.

I missed it yesterday. Thanks for bringing it to my attention.

The report followed on the heels of a survey from the National Association of Home Builders on Tuesday showing confidence among single-family homebuilders dropped to a 13-month low in August because of higher material costs and home prices, which are cooling demand for houses.

Economic Report

Home-builder confidence sinks to lowest level in over a year as home prices soar

Last Updated: Aug. 17, 2021 at 1:22 p.m. ET
First Published: Aug. 17, 2021 at 10:00 a.m. ET
By Jacob Passy

Builders fear that prospective home buyers are being scared away due to sticker shock

The numbers: With no clear end in sight to high home prices and supply-chain struggles, home-building firms are growing increasingly concerned about the state of the housing market.

The National Association of Home Builders’ monthly confidence index fell five points to a reading of 75 in August, the trade group said Tuesday. It represents the lowest level for the index in 13 months — at that time, the housing market was still reeling from the onset of the pandemic, and the home-buying craze of the past year was just beginning to take shape.

“Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs,” said Chuck Fowke, a Tampa, Fla.-based custom home builder and chairman of the National Association of Home Builders. “Policymakers need to find long-term solutions to supply-chain issues.”

Index readings over 50 are a sign of improving confidence. Last year, the index quickly dropped below 50 in April and May as the pandemic began, but confidence rebounded as many Americans opted to resume their search for a new home last summer.

What happened: Two of the three gauges that underpin the overall builder confidence index also experienced five-point declines, including the index that measures current sales conditions and the component that tracks traffic of prospective buyers. The gauge that assesses sales expectations for the next six months remained unchanged from the previous month.

Regionally, every part of the country experienced a decline in confidence among home builders, led by a three-point drop in the South.

{snip}

[Historic NY]

10. Well golly.....where I live,

People have been buying home sight unseen in some places, 2 doors away from my home a house sold for more than 120k more than its value. Speculators have been driving the market also. Builders want to build McMansions, they don't seem to be selling as fast, meanwhile apartment building seem to be the thing, cracker box wooden structures built under the guise of senior or work force housing. Most commercial building as sputtered out, lots of commercial space.

In my nearby city, one speculator has purchased over two hundred properties, nuts you say. Inner gentrification neighborhoods are up and coming, at least rents are proving it. I am amazed at the changes as people look for the 19th Century charm, in the decay of the past. Sticker shock? They have turned around hundreds of forlorn buildings. Commercial real estate is hot because some buildings sell here, for a tiny fraction of the rent in Brooklyn. These new prospectors aren't afraid.

I don't think it's so much buyer confidence as it's builder's not willing to adapt to the changes of just what people want. They are being picky and weighing the cost of buying and renovating. There are more than 1700 homes listed for sale and are pricing at 16.7% greater than July 2020. Builders still want to build the ugly tract planned homes, vinyl sided, throw in some stone, buyers want something else

The Hudson Valley is still on fire real estate wise.

[mahatmakanejeeves]

11. There was a recent NYT article about housing in one Hudson Valley town. I linked to it here.

I'll dig that up.

[Farmer-Rick]

9. I'm starting to see that.

So, wouldn't we be seeing a lot more inflation what with too much money chasing too few products.

[TomCADem]

13. That Does Not Make Sense. If home prices go up, then construction should sky rocket...

The main issue is that existing home owner opposition to housing, plus a lack of available construction labor is more likely to put a crimp on construction.