U.S. Housing Starts Back Up over One Million Units in April
Alex Carrick
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Seed Newsvine |
U.S. Housing Starts at 1.032 Million Units in April 2008
In the continuing quest for better news on U.S. housing markets, it is good to report that April 2008 housing start figures released by the U.S. Census Bureau and Department of Housing offer some encouragement. The level of starts was up only slightly versus the previous months, but at least it was back over one million units, on a seasonally adjusted annualized basis.
At 1.032 million units, April was the third lowest month in this latest cyclical downturn. March, at 954,000 units, and December 2007, at exactly 1.000 million units, were even lower. The first four months of this year have averaged 1.039 million units annualized, which is -28.9% versus the first-four-month average of last year, at 1.462 million units.
Housing starts are now down nearly 60% from their peak in January 2006 to the present. A strong case can be made, however, that the past five months are likely to be the trough in this cycle for housing starts. All three major new home indicators have moved into alignment. Permits, starts and completions are all right around one million units. The fact that completions have finally fallen to the level of starts is quite positive. Completions-above-starts is one of the factors, along with falling sales, that causes a buildup of unsold inventories.
Housing Affordability Much Improved on Two Counts
Other indicators are also suggesting a return to better news. Two factors have particularly helped with respect to housing affordability. First, the Federal Reserve’s aggressive rate cutting has lowered mortgage rates. Second, there have been severe downward adjustments in house prices. Standard & Poor’s Case-Shiller house price index, which monitors existing homes but is also relevant for the whole housing market, recorded a year-over-year percentage change of -13.6% for its 20-city composite.
Ten out of 20 of the largest U.S. housing markets are experiencing double-digit year-over-year home price declines. Las Vegas and Miami, two of the cities with the largest speculative price increases earlier in the cycle, are now showing home price declines of -22.8% and -21.7% respectively.
Employment prospects, which are so influential in terms of establishing consumer confidence, continue to be a sore spot. There were month-to-month job losses in each of this year’s first four months. However, first-quarter Gross Domestic Product (GDP) came in stronger than expected (+0.6%) and this may well point to better economic conditions ahead.
A Welcome Period of Quiet on Financial Matters
The federal government tax rebate checks will be arriving in mail boxes this month and the news on the financial front has been much quieter of late. The latest period of “no more headlines” about this or that brokerage firm or lending institution being in danger of insolvency has provided a healing respite.
As for regional housing starts, these are shown in four graphs that accompany this report. Simply eyeballing the charts seems to indicate that three of the four major geographic sub-regions may have bottomed out and leveled off − the Midwest, South and West. Only the Northeast has continued to clearly head down through the early part of this year.
