Builders are really, really glum, but permits rise

Figures from NAHB of its index of builder confidence.

This graph from says it all.

Do you want the good news or the bad news first?

The good news is that reduced confidence leads to reduced inventory, and Lord Keynes was right about the correlation between supply and demand.

Additional good news comes from HUD, which documents promising increases in housing starts and permit issuance.

The bad news is that decreased building means fewer jobs and a sluggish economic recovery.

According to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built, single-family homes declined one point on continuing concerns about the poor job market and large number of foreclosed homes for sale.

The January HMI fell one point to 15 (one a scale of 100), its lowest point since June of 2009.

Consumers are waiting to see significant positive signs of improvement in employment and confidence, said Chief Economist David Crowe of the Home Builders group.

“Meanwhile, competition from foreclosed homes is also severely impacting new-home sales,” he noted.  “That said, expected improvement in the job market this spring will help propel the housing recovery as we head into the prime home buying season.”

Maybe, maybe not.

As for starts and permits, HUD says privately-owned housing starts in December were 4.0 percent below the revised November estimate but 0.2 percent above the December 2008 rate.

Single-family housing starts last month fell 6.9 percent below November. But issuance of building permits was 10.9 percent higher than the prior month and 15.8 percent above the year earlier.

Single-family permit authorizations were 8.3 percent above the November figure, but multi-family permits dropped 36.9 percent below December 2008.

If these numbers prove anything (and you’ll find much more information in my free biweekly e-newsletter that is due out again tomorrow around noon), it is to confirm the prevailing wisdom that the housing recovery is bound to be erratic over the coming year. And that’s likely to be true even in the suspect event of a robust rebound of the national and global economies.

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Malcolm Carter

Licensed Associate Real Estate Broker

Senior Vice President

Charles Rutenberg Realty

127 E. 56th Street

New York, NY 10022

M: 347-886-0248

F: 347-438-3201

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