New home permits rise, but headwinds persist
Today’s New Residential Construction Report showed slight increases to both single family permits and starts from last month and notable declines from last year while the new home market remains historically distressed.
Single family housing permits, the most leading of indicators, increased 2.5% on a month-to-month basis to 405K single family units (SAAR), dropping a notable 6.90% below the level seen in May 2010 and an astonishing 77.47% below the peak in September 2005.
Single family housing starts increased 3.7% to 419K units (SAAR), dropping 8.91% below the level seen in May 2010 and a stunning 77.02% below the peak set in early 2006.
With the substantial headwinds of elevated unemployment, epic levels of foreclosure and delinquency, mounting bankruptcies, contracting consumer credit, and falling real wages, an overhang of inventory and still falling home prices, the environment for “organic” home sales remains weak and likely very fragile.
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