Thursday, January 19, 2006

“Evidence of US Housing Slowdown Continues to Mount.”

The Dow Jones News Wire (no link) carried an item today titled “Evidence of US Housing Slowdown Continues to Mount.” Residential construction activity is slowing and so is the number of building permits being issued. Although these numbers would seem to lend credence to the bear theory that air is leaking out of the housing bubble, I would personally rather see these types of numbers go up every month so that the housing supply keeps growing causing prices to eventually take a steeper downward trajectory.


“Data released by the Commerce Department Thursday showed that housing starts, a key measure of new residential construction activity, dropped 8.9% to an annual rate of 1.933 million units in December. The drop was twice the decline analysts had expected and the biggest since March of last year.

Building permits issued in December dropped by 4.4% to a 2.068 million annual rate, also greater that the anticipated decline.

"Housing affordability has eroded significantly due to sky-high house prices and, to a lesser extent, higher mortgage rates," analysts at BCA, an independent research firm, said in a report.

BCA said the cooling in U.S. housing activity should coincide with a slowdown in consumer spending.

The weaker housing starts follows on the heels of data released Wednesday showing that the National Association of Home Builders' index for sales of new, single-family homes remained unchanged in January after falling to a 2.5-year low in December. A figure above 50 means the number of builders who see good sales outnumbers those who see bad sales.”

End Snip…


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