Wednesday, January 19, 2011

New Residential Construction Report: December 2010

Today’s New Residential Construction Report showed a notable gain for single family permits and a notable decline for single family starts which, considering the truly depressed level of new home construction activity, appears to suggest that housing is continuing to remain historically weak.

Single family housing permits, the most leading of indicators, increased 5.5% on a month-to-month basis to 440K single family units (SAAR) but declined a notable 14.9% below the level seen in December 2009 and an astonishing 75.53% below the peak in September 2005.

Single family housing starts declined 9.0% to 417K (SAAR) units dropping 14.2% below the level seen in December 2009 and a whopping 77.13% below the peak set in early 2006.

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