Paper Economy - A US Real Estate Bubble Blog

Friday, April 16, 2010

New Residential Construction Report: March 2010

Today’s New Residential Construction Report continued to indicate a tepid recovery for the new home construction market showing the continued significant 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 531K single family units (SAAR), the level of national housing starts still remains at depressed levels.

Single family housing permits, the most leading of indicators, increased significantly on a month-to-month basis at 543K single family units (SAAR), jumping a whopping 50.8% as compared to March 2009 but still remaining an astonishing 69.80% below the peak in September 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.


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