CNBC is reporting this morning that US Housing Starts declined in October 14.6% to the lowest level in 6 years, while building permits were down a whopping 6.29%. Guests on the network, James Wilson and Jan Hatzius (Goldman Sachs Economist), predicted that housing will be a drag on GDP in ‘07. Hatzius attributed the problem to bloated inventories and weakening sales from the home builders. Wilson predicted that builders will start marking down prices significantly, and that the worst is yet to come in the housing market. “The bottom has not hit yet.” He predicted that the Fed will keep interest rates steady until summer, when they will likely start easing.

Bloomberg reports, “Builders broke ground on 1.486 million new homes at an annual rate, down 14.6 percent from September’s 1.74 million pace, the Commerce Department said today. Building permits dropped to a 1.535 million pace, a record ninth straight decline and the lowest since December 1997.”

For those looking to buy a home, this is nothing but good news. The irrational exuberance that has been plaguing our housing market has finally really started to dissipate. With builders quickly dropping prices on their new homes, and previously owned homes staying on market for longer and longer, it is finally starting to look like a buyers market once again. Don’t get too excited yet, though. With thousands, if not millions of people in homes they can’t afford thanks to risky loans, it looks like the market will only continue to decline until foreclosed homes have truly hit a feverish pace. We need to see everything balance out before we’re close to the bottom of this giant real estate bubble. Buyers will likely be rewarded if they can continue to show patience.

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Tags: bubble, builders, construction, estate, fed, foreclosure, homebuilders, housing, interest, rates, real

• Phoenix home resale market down 41% from last year, but up slightly from previous month.
• Home Depot is offering a 10% discount this weekend to military personnel and veterans.
• Low interest rates have led to a surge in mortgage refinancing applications last week.
• One New Foreclosure Filing for every 1,122 U.S. Households.
• Two of the largest home builders report 58% drop in orders

Tags: builders, estate, homebuilders, interest, mortgage, rates, real

By definition, news is –well–about new and sometimes unexpected things. Such is the case apparently with U.S. housing starts which surprised some experts by rising last month by an estimated 5.9%, according to a Commerce Department report.

Bob Willis,writing for Bloomberg and reported in the Detroit Free Press, says some believe “the housing slump may be nearing an end.”

Willis writes that “stepped-up construction in the Midwest and the South made up for declines in the Northeast and West.”

Before this surprise increase, housing starts in the U.S. had reached a three year low. But,for the first time in a year, Willis reports, there is an increase of home builder confidence.

Tags: builder, construction, housing, mortgage, rates, starts

In the second quarter of ‘06 home prices crept upward, but slowed considerably from ‘05, reports Bloomberg

Prices for single-family homes rose an average of 1.17 percent during the quarter, compared with 3.65 percent growth in the second quarter of 2005. The drop was the biggest since the agency began keeping records in 1975. The report doesn’t give an average price, only the percent of change.

The report attributed the decline in price appreciation to increases in interest rates and greater inventory levels. The Office of Federal Housing Enterprise Oversight (OFHEO), which issued the report made several interesting discoveries:

“- Price appreciation remains relatively robust in the two states hardest hit by Hurricane Katrina one year ago—Louisiana and Mississippi. Four-quarter appreciation rates were well above the national average in several cities in the area including: New Orleans-Metairie-Kenner, Gulfport-Biloxi, Baton Rouge, and Pascagoula. Gulfport-Biloxi and Pascagoula in fact logged their highest appreciation rates since the beginning of OFHEO’s Index.
- Despite a nine percentage point decline in its four-quarter appreciation rate, Arizona’s housing market still exhibits the highest appreciation rate among the 50 states. Prices were up roughly 24 percent compared to the second quarter of 2005 but grew only 2.94 percent in the most recent quarter.
- While the 20 Metropolitan Statistical Areas (MSAs) with the highest appreciation included nine cities in Florida, the representation of other states continues to increase. MSAs in North Carolina, South Carolina, and Washington State have now entered the list of fastest appreciating markets.”

Take a look at house appreciation rates by state over the past quarter, year, 5-years, and since 1980:

As you can see from the report, Arizona and Florida led the charge over the past year. Idaho, Oregon, and Washington followed, as the Northwest continues to be hot in ‘06.

We’ll continue to bring you more information, analysis, and data from this report in upcoming posts. . .

Tags: bubble, Enterprise, Federal, hot, housing, interest, market, Oversight, rates