Many economists were beginning to think we might have actually hit bottom, so the news that construction of new homes and apartments actually fell 12.8% last month – instead of increasing slightly as they had hoped – came as a bit of a downer.
It is a report filled with sobering news: applications for new building permits are down 3.3%, to a new record low annual rate. Apartment construction was absolutely rocked – dropping 46.1 percent.
But not everyone is pessimistic. Patrick Newport of IHS/Global Insight says it's important to look at the numbers of building permits issued, not just those of houses actually started last month, to see what's coming in the future. And the outlook for single family houses is actually somewhat bright. And as for apartments, well, they can't get much worse.
"Overall it was not a bad report, it sort of confirmed that the market has hit a bottom and that bottom was probably in January," Mr. Newport says. As for apartments? "It's already so low it can't get much lower."
While the end of the nation’s collective housing woes might be in sight, these numbers show that rising confidence can’t erase the huge stock of cheap, foreclosed homes still out there on the market – with more coming soon – that will take the wind out of construction company sails for some time to come.
But maybe, the numbers suggest, this is a regional story. While housing starts in the Northeast plunged 42.2%, they rose 42.5% in the West. Granted the West has been absolutely decimated by this housing crisis, but the central fact remains: people still want to live and move there, and developers know this.
This recession has been noteworthy in how it has kept people from selling their homes and moving – a phenomenon that has slowed population declines in the Northeast, the Rust Belt, and many major, expensive, big cities. But people’s preferences – including their inexplicable love of Phoenix’s zillion-degree heat – are people’s preferences.
"There is a pickup in demand [in the West]. We just have to wait and see whether it's real or whether it's a one month thing," Mr. Newport says.
Once things start to recover, the numbers seem to show, no one expects a population boom in Buffalo anytime soon.
– Monitor correspondent Jeremy Kutner contributed this post.