The Commerce Department reported today that housing starts fell 8.5% in January to a seasonally adjusted annual rate of 890,000. There were 973,000 in December 2012, which was the best month for new-home starts since June 2008. This was the dark spot in an otherwise bright outlook: according to Commerce, the number of new building permits increased 1.8% last month from 909,000 in December 2012 to 925,000 in January and the pace of construction of single-family homes in January rose slightly to 0.8%.
But January’s new-home starts figure is not reassuring builders. The National Association of Home Builders recently reported that builder confidence on the NAHB/Wells Fargo Housing Market Index dropped one point this month to 46, which is considered a poor outlook. An index where the number is over 50 indicates a positive outlook on single-family home sales by home builders.
Consumers were equally down on the housing market. The Conference Board recently reported that Consumer Confidence Index fell 8.1 points in January and the Employment Trends Index declined by approximately 0.1%.
“Many people are worried about the job market and that any full-time employment that will pay them a salary that will allow them to buy a house will no longer be available,” Mr. Moshé said. “The price of materials needed to build these homes is on the rise, which is impacting these residential construction firms. These companies are also feeling the pinch financially and they do not have the needed revenue to expand their payroll and hire more workers. The solution for consumers: find homes that are built and have not sold. There is a silver lining in every dark cloud. Just look for it!”
“Consumers are also seeing higher food and gas prices, so this means it may be a long time until they can afford a house,” Mr. Moshé said. “Home prices are climbing again and that — combined with the stringent lending requirements — will deter many prospective homebuyers from making the big-ticket purchase. Although home prices may be climbing, will they sell? Keep an eye out for those homes to come back down when they don’t.”
Charles Rutenberg Realty is one of the nation’s fastest-growing Agencies (http://www.crrli.com/