Residential market recovery not yet started
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RSS FeedThe housing collapse appears to be largely over at the job site but continues to worsen downstream with still declining home prices and rising foreclosures. Housing starts have varied narrowly about a 1.0 million/year pace since last December. The latest data is contradictory. Pending home sales are up but mortgage applications are down. There is a considerable risk of several months of housing starts below the 1.0 million level.
This would reflect homebuilders cutting their starts well below their sales to accommodate the 2.0 million unit surplus of existing homes for sales. Many homebuilders in the Southeast, Southwest and Great Lakes will have to do this in markets with deeply discounted existing homes available. But homebuilders in the rest of the country do not have to do this. They will be able to raise their starts to their sales level by year end.
And the sales level looks like it will be rising parallel to an improvement in consumer confidence set off by falling gasoline and grain prices. Recovery will be slow. Only 30% of the 2006-08 drop in starts will be regained by the end of next year.
U.S. Residential Building Construction
(thousands of units)
| Monthly Figures (1) (latest actual values) |
|||||||
| Actual | Forecast | ||||||
| Jun-08 | Jul-08 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Northeast (% change is period versus same period, previous year) |
250 | 174 | 189 | 171 | 143 | 134 | 134 |
| 61.3% | 13.0% | 7.4% | -9.6% | -16.7% | -5.8% | -0.1% | |
| Midwest | 140 | 154 | 357 | 285 | 206 | 146 | 176 |
| -40.2% | -35.6% | 0.5% | -20.2% | -27.7% | -29.0% | 20.2% | |
| South | 487 | 447 | 1,001 | 912 | 675 | 514 | 602 |
| -32.3% | -30.6% | 10.4% | -8.9% | -26.0% | -23.9% | 17.2% | |
| West | 207 | 190 | 551 | 444 | 317 | 216 | 251 |
| -40.9% | -43.1% | 7.3% | -19.4% | -28.5% | -32.0% | 16.2% | |
| Total | 1,084 | 965 | 2,073 | 1,811 | 1,341 | 1009 | 1163 |
| -25.7% | -29.6% | 6.3% | -12.6% | -26.0% | -24.7% | 15.2% | |
| Total Single-family | 660 | 641 | 1719 | 1,474 | 1,034 | 684 | 825 |
| -41.9% | -39.2% | 7.1% | -14.3% | -29.8% | -33.8% | 20.6% | |
| Total Multi-family | 424 | 324 | 354 | 338 | 307 | 325 | 338 |
| 31.7% | 2.5% | 2.6% | -4.7% | -9.2% | 5.9% | 3.9% | |
| New Home Sales (2) | 503 | 515 | 1,279 | 1,049 | 764 | 532 | 605 |
| -36.9% | -35.3% | 6.5% | -18.0% | -27.2% | -30.4% | 13.7% | |
| Manufactured Home Shipments | 87 | 84 | 148 | 118 | 96 | 88 | 92 |
| -11.2% | -16.8% | 13.8% | -20.0% | -19.3% | -8.3% | 4.5% | |
(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Based on a survey of homebuilders; excludes homes built under contract and multi-family rental units).
Actuals: U.S. Department of Commerce, National Association of Realtors, Freddie Mac.
Forecasts and table: Reed Construction Data.
Mfg. home shipment data for Feb. and Mar.
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