New Construction Numbers… (A Slight Return)

Last month, the New Residential Construction Report was released with a bit of fanfare as it had shown that “new home starts” had jumped 5.0%.

As is typical, given the current climate, most media sources seemed to over-report the 5% increase while ignoring the fairly significant year-over-year decrease.

Subsequently, home building stocks gained roughly 2% across the board on the news as the market materialized the optimism into real monetary “investment”.

Unfortunately for investors though, a more measured interpretation of last months “mixed” numbers may have led to a better response given that the just released New Residential Construction Report can be interpreted as nothing short of Bad News.

Here are the statistics outlined in today’s report:

1. Housing Starts down 5.3% and down 11% compared to June 2005.
2. Single Family Housing Starts down 6.5% and down 13.8% compared to June 2005.
3. For the Northeast, Single Family Housing Starts down 32.8% and down 37.8% compared to June 2005.
4. For the West, Single Family Housing Starts down 5.9% and down 11% compared to June 2005.
5. Housing Permits down 4.3% and down 14.9% compared to June 2005.
6. Single Family Housing Permits down 6.3% and down 17.5% compared to June 2005.
7. For the Northeast, Single Family Housing Permits down 3.9% and down 21.4% compared to June 2005.
8. For the West, Single Family Housing Permits down 3.2% and down 20.3% compared to June 2005.

As can obviously be seen in this report, there are a lot of down numbers.

Also, keep in mind that this particular report does NOT factor in the cancellations that have been widely reported to be occurring in new construction. Be on the look out for cancellations to be making a further and significant impact on this report in the months to come.