Talking about the latest news on residential construction from HUD and the Census Bureau and what it really means…
We got yet another dismal housing report today. This time it is the latest report on New Residential Construction for January 2014 from the Census Bureau and HUD. Here are the highlights:
- Single-family housing starts were 15.9% lower than the December 2013 level
- Single-family housing starts were 2.0% lower than the January 2013 level
- This is the lowest level in 4 months
- Housing starts in the South fell 12.5%
Check out the chart showing housing starts:
- Single-family authorizations in January 2014 were 1.3% lower than the revised December 2013 level.
- Privately owned housing units authorized by building permits were 5.4% below the December 2013 level
- Privately owned housing units authorized by building permits were 2.4% higher than the January 2013 level
Check out the chart showing building permits:
Of course we heard the lame excuse that the weather was to blame again. However, if someone is really serious about buying a home or building a home, then crappy weather will NOT stop them.
I will admit it could lead to a lower number of building permits. While there is some evidence that the weather is playing a role in the weak housing market, it is NOT the only cause.
New home inventory is at a 50 year low and existing homes for sale are at a 14 year low according to NAR. If unemployment and the labor participation rate improve, we could see a substantial increase in demand for new homes. Which will mean builders will ramp up their production levels quickly.
Just yesterday I posted how home builder confidence has fallen. Both of these reports mean that Friday’s Existing Home Sales report from NAR is going to be super important.
The Take Away
The short and sweet message here:
The New Residential Construction report was bad
The reality is this report sucks
The reality is the weather is not the only reason for weak housing reports
The reality is the economy is weak, unemployment is high and median income is still too low
The reality is that mortgage rates & home prices are expected to increase
The reality is this report changes nothing about whether or not buying a home makes sense for YOU
The reality is this report may keep mortgage rates from rising…for now
The reality is if you are thinking about selling, less competition from new homes is a good thing!