The Housing Slump Rolls On

A bit of good news on the real estate front would be ideal right about now. Alas, today's updates on the housing market are once more disappointing.

Housing starts for August posted another hefty decline, the Census Bureau reports. The 6.2% drop in annualized starts last month vs. July isn't the biggest decline on record, but it's still hefty. More troubling is the fact that the declines just keep coming, as our chart below shows. Starts are now at a 17-1/2-year low.

Investors have been looking for a bottom in starts, and the bounce in June gave hope to some, including this editor, who thought maybe, just maybe, the carnage was behind us. But the optimism was premature -- again. Today's numbers reconfirm the bearish tone in housing.

Ditto for the number of new housing permits issued, which continued slumping last month as well, as our second chart below reveals. As with starts, the June bounce in new permits is now ancient history and the downward spiral rolls on. Privately-owned housing starts in August dropped more than 6% from July to a seasonally adjusted annual rate of 895,000 last month, the government advises. That's more than 33% below the year-earlier figure.

The permits report is the more disturbing of the two data series since it's a leading indicator. Its message remains the same: The odds for a rebound in housing still look a ways off.

Indeed, home foreclosures are still mounting, and to the extent that the housing market looks for stability in the financial sector, well, one only need read the headlines in the last few days to realize that there's still plenty to worry about on that front.

It ain't over till it's over, as Mr. Berra famously said, and this slump still isn't over.

Comments

[Jackson Cash:]

REMEMBER HOW WE GOT HERE!

Welcome to the Divided Socialist States of America

-- BURN BABY BURN.

2008 Sep 17 10:17 AM

[Lars39:]

How about going back to smaller, more affordable houses?
Live within your means? Who wants that?

2008 Sep 17 10:30 AM

[Lex Luz:]

When I hear Bob Toll, Ara Hovnanian, and Lawrence Yun make a joint statement that "the housing market is finished forever," then I will know we have reached the bottom, and the buying opportunity of a lifetime will be upon us.

2008 Sep 17 10:46 AM

[Mr Ed:]

The drop in new permits will help keep new supply of the market and allow the secondary homes a better chance to be sold. This is the only silver lining that I see in this weak housing number.

2008 Sep 17 11:58 AM

[Jason Rines...:]

Innovation and job creation needed. Wages stage flat, housing rebound will take much longer.

2008 Sep 17 01:21 PM

[Mr. Matt:]

Low housing starts is a good thing, this is fantastic news. You all act as though the problem is that we aren't building enough homes. The problem is that the inventory is over 11 months supply. If builders are continuing to build and continuing to increase the supply that can only make things worse. Only through low housing starts will the natural household growth eventually chip away at the glut and return things to 'stable' conditions.

2008 Sep 17 01:29 PM

[tomf:]

As odd as it may seem, a decline in starts & permits is a good sign because it helps reduce the excess inventory of unsold homes. The sooner we get the inventory down to reasonable levels, the sooner we're back on the road to recovery.

2008 Sep 18 08:52 AM

[Will Rahal:]

I have been Bearish for a while.
As a frequent commentator here, I want to let you
know that I believe that a ST/IT bottom has been put in today.

2008 Sep 18 01:46 PM