"Biggest Decline In 14 Years"
The oversupply of new homes has finally shown up in housing starts as the firms slammed on the brakes. "Builders started construction on new homes and apartments at a seasonally adjusted annual rate of 1.84 million units in March, down from 2.23 million units in February."
"While analysts had been expecting a decline in housing, the steepness of the drop, the biggest plunge since January 1991, caught them by surprise." Last month when starts were higher than expected, it was heralded as bullish, and the pullback is predictably being marketed as bullish.
8 Comments:
The analysts are telling people to focus on the permits number which remained high. At this point in the cycle they believe permits are far more important and gives a clear sign of strong demand in the future. When asked about the effect of pre-construction speculation the answer given is, "not a significant factor in the market". They have alot to learn. Remember people are always most bullish at the top.
I agree.
I can't believe how bad the analysts are at being objective about this situation. It reminds me of the dot com crash. I'm surprised, no, make that shocked. It was one thing to be bullish about the "New Economy" for a while at least, because it was well, new. At least they had an excuse then.
There is nothing new about the housing situation. No big influx of immigration, no new jobs, no nothing. The only thing we've had is a historically low interest rate and new innovative financing schemes. You'd think that would cause people (analysts) to stop and question the current housing situation.
It seems the public never wants to learn. But let's see the public takes their cue from a private central bank that lowered short-term 13 times creating a fantastic financial debt bubble in RE. What did Livermore say? "What's happened in the past will happen over and over again, of this I am sure." Debt delfation lies ahead....
Remember there was a big decline in November as well,then it did pick back up.
I am shocked as well how the analysts
are playing down thr risks involved.
I went through the tech bubble
and it so similiar.
People dont seem to learn.
It was just over 10 years ago we a housing correction.People have short memories.
Great news!
Outside of housing, energy, and food sectors, inflation at the wholesale level rose by just 0.1 percent in March.
Er, Uh, but what else is left in the economy when you back out the housing, energy, and food sectors?
(Absolutely shocking that the homebuilder stocks could rally after this news.)
The rally sold off some this afternoon, but I get your point. Actually, having followed these co.s for a while I have come to see such behaviour as more proof there is a bubble.
As I had posted previously here on the front lines in the las vegas housing market we had a dead month in March for new subdivisions coming in until like the last 3-4 days and then boom around a total of a 1000 new lots(a sizable amount for a month period) came in of which I am still plowing through. They hit my desk right prior to them being available for permitting so maybe April numbers will be different. Nonetheless, the herd mentality really manifests itself in the housing market....I'm thinking to myself who is going to buy all these homes?
front line in vegas,
Please keep us up on your area. Thanks.
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