Housing starts and permits tumble in May

[SarahB]

Source: MSNBC

U.S. housing starts fell more than expected in May to their lowest level in five months, a government report showed on Wednesday, as a popular homebuyer tax credit that had buoyed construction activity over the past two months expired.

The Commerce Department said housing starts dropped 10 percent to a seasonally adjusted annual rate of 593,000 units, the lowest level since December. The percentage decline was the biggest in 14 months. April's housing starts were revised down to show a 3.9 percent increase, which was previously reported as a 5.8 percent rise.

Analysts polled by Reuters had expected housing starts to fall to 650,000 units. Compared to May last year, starts were up 7.8 percent.

New building permits, which give a sense of future home construction, dropped 5.9 percent to a 574,000-unit pace in May, the lowest in a year. That followed a 10.9 percent drop in April and compared to analysts' forecasts for a rise to 630,000 units.

Housing starts rose in March and April as new home construction was pushed forward to take advantage of a government tax credit for home buyers. Buyers had to sign contracts by April 30 to qualify for the tax credit.

Read more: http://www.msnbc.msn.com/id/37725749/ns/business-stocks_and_economy/

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This is not a shock to anyone who's been paying attention. Our economy can't make it unless it's being propped up. Say goodbye to the "good news" and recovery talk now.

[customerserviceguy]

1. We still haven't reached the bottom of the housing market

Only when foreclosures slow to a trickle can that be said to have happened. It's a vicious circle, housing prices decline below mortgage loan balances owed, people walk away, the foreclosed house goes on the market for a lower price, and the cycle continues.

Either the government can get out of the way and let the market hit bottom, or it can piddle away tax money doing CPR on a dead body.

[closeupready]

7. This is the pattern that happens historically

It's hard to imagine it now, but in the 70's, parts of Manhattan used to be abandoned property, and squatters made their homes there. Even up through the 90's, lots of places in the five boroughs were wasteland. Those days are long gone, even in the current economic situation.

[ixion]

2. Yeah, talk of "recovery" when the economy is on life support is silly

But that hasn't stopped people from doing just that.

Further, the issues that caused the meltdown: voodoo investment vehicles (CDOs, CDSs, etc), and the fact that so-called "too-big-to-fail" banks are insolvent, as well as the fact that the next wave of bad loan resets are starting (peaking in 2011), and there is a massive shadow inventory of empty houses, coupled with an anemic (at best) job market, and that our deficit is now more than 80% of our GDP -- well, we're pretty much screwed on the short term.

There is a nasty path that we are going to have to walk at some point. The longer we put it off, the worse it will be.

It's just simple macro-economics.

[depakid]

3. Seeing as how there's a large supply of existing homes on the market in most places

this doesn't really surprise me all that much.

[wordpix]

5. but the developers still see big $ signs when they see undeveloped property

You can develop already developed properties by making them greener or more liveable with native plantings, sidewalks, gardens, facade makeovers...yet the fat cats continue to tear down trees and destroy clean water and wildlife habitat with their new housing starts. Fuck them, they deserve to go under.

[tomm2thumbs]

4. probably contractors are all doing it without permits - if BP doesn't follow the laws, should they?

government teaching everyone how to act by example -

[wordpix]

6. housing permits on local level much like BigOil permits on fed level---rubber stamps abound

I could tell you some stories from the trenches of my rural town, now suburbia

[closeupready]

8. Oh yeah. Lots of that goes on.

n/t