U.S. Housing Starts Slide to Lowest Level in 17 Years

[swag]

Source: Bloomberg

April 16 (Bloomberg) -- Housing starts in the U.S. dropped more than twice as much as forecast in March to a 17-year low, signaling that declining construction will keep eroding economic growth this year.

Work began on 947,000 homes at an annual rate, down 11.9 percent from February and the fewest since March 1991, the Commerce Department said today in Washington. Building permits, a gauge of future construction, fell to a 927,000 rate from 984,000 the prior month.

Foreclosures are pushing down property values by adding to the glut of unsold homes, prompting buyers to hold out for better bargains and undermining new construction. The Federal Reserve will probably lower the benchmark rate again at its meeting this month to cushion the economy against the housing- led slowdown.

``Home construction is probably going to continue to fall right through this year,'' Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. ``While we see a bottoming in sales in 2008, we really don't see an improvement until later 2009, early 2010.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=adO6C5qms8ew&refer=home

[MetaTrope]

1. A Bush by any other name...

Still a Bush.

[notesdev]

2. Why build ANY homes right now?

There's a 4-5 year inventory glutting the market. Why would anyone start new construction now except under very unusual circumstances? There's no need in America for another million new houses - the need is for the houses that exist to become affordable.

[Omaha Steve]

3. U.S. housing starts sag, core prices rise modestly

Source: Reuters

By Glenn Somerville
WASHINGTON, April 16 (Reuters) - U.S. home building skidded to a 17-year low last month while consumer prices rose slightly less than expected, leaving policy-makers room to cut benchmark interest rates further to ward off a housing-led slowdown.

The Commerce Department said on Wednesday that housing starts dropped 11.9 percent in March to an annual rate of 947,000 units, the slowest pace since March 1991 and well below the 1.02 million economists had expected.

Separately, the Labor Department said consumer prices rose 0.3 percent last month, below the 0.4 percent forecast, after a flat reading in February. Stripping out food and energy, core prices, which also held steady in February, rose an even milder 0.2 percent, restrained by a big drop in the cost of clothing.

The data underlined strains that U.S. consumers face, squeezed by rising prices at the gasoline pump and in food stores, only partly offset by cheaper clothes, while prices they get for their homes fall and house-building declines.
"I'm not ruling out a recession," the president of the San Francisco Federal Reserve Bank, Janet Yellen, told reporters after delivering a speech in Alameda, California.



Read more: http://www.guardian.co.uk/feedarticle?id=7466419

[alstephenson]

4. One reason home prices fall...

is because of over-building. There is currently no demand for new homes - so don't build any. The home building business is cyclical - the builders made huge profits over the last several years and now they need a tax break? Why? They are just going through a relatively normal business cycle. If they don't build, they don't LOSE money, they just make less profit, or maybe no profit and they go out of business (until the next cycle). The builders enjoyed tremendous demand fueled by the easy money provided by the lenders. They got their money out of their projects. Now if a builder is stupid enough to be sitting on a bunch of spec homes, or with a piece of land that now has less value - well too bad. And I don't feel sorry for the real estate brokers, title companies, escrow agents, loan officers or others that made obscene amounts of money in a relatively short time, either.

[leQ]

5. food prices especially rose soemthing like 10% (i'm calulating my bill's history) -nt

[PSPS]

6. More cooked figures

0.3% consumer price rise? Are you kidding? I know they cook the "core" figure, which is defined as excluding anything that has gone up in price, so they must be doing the same kind of dodgy work on the "real" number now.

As for the housing drops -- that's not surprising. I see houses for sale everywhere with joke asking prices. Now that "liar loans" aren't available anymore, and you have to actually document your income/expenses and make your down payment with non-borrowed funds, there aren't going to be many $50K/year earners qualifying for that $650K loan on the 800 SF condo. Housing prices will have to correct to their proper (affordable) level before there's a reasonable level of demand again.