Tuesday, March 16, 2010

New Residential Construction Report: February 2010

Today’s New Residential Construction Report continued to indicate a weak recovery for the new home market showing the continued year-over-year increases to both permits and starts.

It’s clear now that the government’s housing stimulus tax credit and loose FHA lending policies have worked to prop both new and existing home sales.

The government’s efforts, which now include an extension of an even more broad housing tax credit, have sponsored demand and provided the new home market with a more fertile environment to clear.

Nonetheless, at 499K single family units (SAAR), the level of national housing starts still remains below levels seen in the fall of 2008.

Single family housing permits, the most leading of indicators, stayed flat on a month-to-month basis at 503K single family units (SAAR), increasing a whopping 32.02% as compared to February 2009 but still remaining an astonishing 69.39% below the peak in January 2005.

With the substantial headwinds of rising unemployment, epic levels of foreclosure and delinquency, mounting bankruptcies, contracting consumer credit, and falling wages, an overhang of inventory and still falling home prices, the environment for “organic” home sales remains weak and likely very fragile.