In a surprise drop, housing starts for July fell 1%.
“The 1 percent decline in starts to an annual rate of 581,000 was the first drop in three months and followed a 587,000 rate in June, the Commerce Department said today in Washington,” reported Bloomberg.
Interestingly, though, single-family home construction climbed 1.7% to reach the highest rate since October 2008. This sector accounts for 75% of the industry.
But despite this pop in single-family home starts, multi-family home construction pulled the data down.
MarketWatch editor Rex Nutting reports that multi-family housing starts fell 13%.
He also reported, “After 14 straight quarters of declines, many economists expect that residential investment will finally contribute to growth in the nation’s gross domestic product for the current quarter that began in July and runs through September.”
And this drop did come as a surprise…
CNNMoney reports, “Economists were expecting housing starts to increase to an annual rate of 599,000 units, according to a consensus estimate gathered by Briefing.com.”
In fact, July housing starts clocked in 37.7% lower than in July 2008 when the figure was 933,000.
Overall, applications for building permits fell 1.8% in July.
On the flip side, however, it’s still a buyer’s market.
“The industry is seeing increased demand from consumers who want to take advantage of a new federal tax credit for first-time homebuyers,” reports Yahoo Finance and the Associated Press. “It covers 10 percent of a home price up to $8,000. It is set to expire at the end of November.”
Additionally, building permits for single-family homes rose an amazing 27% since March, and starts have jumped 36%, seeing a rise for five straight months, according to MarketWatch.
These statistics have led to the National Association of Home Builders reporting that its index of industry confidence rose in August. It’s now at the highest level it’s been in a year.
That said, there could be more pain to come.
Unemployment is still high, officially at 9.4%, and expected to climb to 10%.
If you don’t have a job, you can’t buy a house, no matter how juicy the tax credit is…
I touched base with WaveStrength Options Weekly's editor Adam Lass and he mentioned that the Obama administration is keeping a watchful eye on the housing market, and he believes that housing will pull through, because the administration is determined to pull it through – no matter the true cost. Adam’s so confident that the government will do whatever is necessary, that he’s put his money where his mouth is: He’s set up a portfolio for his readers that can benefit from the government’s interference. Learn here what this portfolio includes and how you could profit from this government-backed recovery effort.
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