Housing Starts May Have a Way to Fall
The disappointing economic news today is that housing starts fell in April, or so the wires say. To me this is more evidence that when markets rise people expect things to get better.
Such forecasts for housing starts ignore the reality. It is amazing that any homes are started at all these days, given the high supply of unsold new homes and the large number of foreclosed homes available.
The latest figures indicate that 509,600 single-family homes were started in the 12 months through April. That is the lowest figure for any 12 months since the government started keeping count in 1959. The annual rate of April’s starts on single-family homes was just 368,000. That rate is the highest of 2009, but otherwise is the lowest ever.
Numbers like that could be taken as a sign that demand surely is about to catch up with supply. But that is not the case. One result of the boom is a housing glut in many markets. Looking at running five-year totals, the figure is still among the highest ever.
There will be signs when the housing market begins to recover, but they won’t be found in this statistic."