Some bright economic news this morning shining through the AIG bonus haze…
New housing starts climbed unexpectedly in February. News homes and apartment construction jumped 22.2% in January to 583,000. That’s up from the 450,000 economists expected.
The expected number factored in a drop in housing starts from January’s level of 477,000.
Most of that increase was due to condo construction, which jumped 80%. All regions (excepting the West) saw a gain. And this is the first increase since June when new housing starts climbed 11%.
It’s also the biggest climb since 1990, according to the Commerce Department.
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Applications for new-home construction increased in February, too. Economists expected 500,000 applications, but the number clocked in at 547,000 – a climb of 3% over January’s applications.
This is good news, but the housing industry has a lot of ground to make up. Back in February 2008, more than 1.1 million news homes were started, and now those starts are down 47%.
But some analysts are starting to see the light, particularly with President Obama’s plan for foreclosures.
The administration announced a $75 billion program designed to help “keep as many as 9 million borrowers in their homes and trim foreclosures. His efforts also include a tax break of up to $8,000 for first-time homebuyers that wouldn’t require repayment,” reports Bloomberg.
That won’t help alleviate the glut of 2 million homes that flooded back on the market from all the foreclosures since this crisis started, though.
And while that glut on the market doesn’t help housing prices, the big picture might not be irreversible.
“If we look at all potential foreclosures as a percentage of the entire housing and real estate market, the economic issue is relatively small. I think that we need to make funds available for credit-worthy people and let the system work itself out,” Randy Carver, investment advisor for Raymond James, told Forbes.
The banks need to do their part and release their “bailout” money into the wild. Just so long as they release it to “credit-worthy” people, otherwise, we might end up back in the same place.
Adam Lass, editor of WaveStrength Options Weekly, says, “Dial your way-back machine to the days of the Clinton administration, and you’ll find Mr. Cuomo sitting pretty at the helm of the Department of Housing and Urban Development. Indeed, many historians of our current troubles credit our entire economic collapse to Mr. Cuomo’s vigorous championing of subprime mortgages as poverty’s cure all.”
Perhaps the next round will be different…
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