Everything has now changed. Last month the housing collapse appeared to be largely over at the job site although continuing 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.
There is no hard data yet on how the credit crunch and the expected federal fix for it are impacting housing. The initial impact will be unambiguously negative. Consumer confidence, income, and to a lesser extend, credit access will all worsen significantly in September, October and possibly November. Then the federal credit fix and the housing fix passed several months ago to be effective October 1st kick in. In both cases, homeowners struggling to avoid foreclosure will be helped with lower interest rates or reduced mortgage principal. This will prevent more homes being added to the bloated total of homes for sale but will not boost new home sales for many months.
Housing was hurt less by the recent credit crunch than other construction markets. The financially marginal homebuyers had already been priced out of the market. And housing will be helped more than other construction sectors by the fix for the credit crunch because much of it takes the form of monthly mortgage payment forgiveness.
U.S. Residential Building Construction
(thousands of units)
| Monthly Figures (1) (latest actual values) |
Annual Figures | ||||||
| Actual | Forecast | ||||||
| Jul-08 | Aug-08 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Northeast (% change is period versus same period, previous year) |
179 | 153 | 189 | 171 | 143 | 150 | 160 |
| 16.2% | 56.1% | 7.4% | -9.6% | -16.7% | 5.3% | 6.5% | |
| Midwest | 154 | 133 | 357 | 285 | 206 | 144 | 166 |
| -35.6% | -44.6% | 0.5% | -20.2% | -27.7% | -29.9% | 14.8% | |
| South | 435 | 403 | 1,001 | 912 | 675 | 475 | 520 |
| -32.5% | -42.1% | 10.4% | -8.9% | -26.0% | -29.6% | 9.4% | |
| West | 186 | 206 | 551 | 444 | 317 | 221 | 253 |
| -44.3% | -32.0% | 7.3% | -19.4% | -28.5% | -30.4% | 14.6% | |
| Total | 954 | 895 | 2,073 | 1,811 | 1,341 | 990 | 1099 |
| -30.4% | -33.1% | 6.3% | -12.6% | -26.0% | -26.2% | 11.0% | |
| Total Single-family | 642 | 630 | 1719 | 1,474 | 1,034 | 670 | 763 |
| -39.1% | -34.9% | 7.1% | -14.3% | -29.8% | -35.3% | 13.9% | |
| Total Multi-family | 312 | 265 | 354 | 338 | 307 | 320 | 336 |
| -1.3% | -28.2% | 2.6% | -4.7% | -9.2% | 4.3% | 5.0% | |
| New Home Sales (2) | 520 | 460 | 1,279 | 1,049 | 764 | 512 | 566 |
| -34.7% | -34.5% | 6.5% | -18.0% | -27.2% | -32.9% | 10.5% | |
| Manufactured Home Shipments | 84 | 85 | 148 | 118 | 96 | 88 | 92 |
| -16.8% | -14.1% | 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 June and July
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