Housing Starts in U.S. Unexpectedly Plunge 11%

[AllentownJake]

Nov. 18 (Bloomberg) -- Builders in October unexpectedly broke ground on fewer U.S. houses as the sales outlook darkened with the looming expiration of a government tax credit and mounting joblessness.

The 11 percent plunge in starts to an annual rate of 529,000, the lowest level since April, followed a 592,000 pace the prior month, Commerce Department figures showed today in Washington. Building permits, a sign of future construction, also decreased.

The market may have seized up as builders waited to see if the administration would extend a first-time buyer incentive that helped lift sales. President Barack Obama signed legislation this month to include some current owners, which may give companies such as Toll Brothers Inc. reason to gain optimism even as the highest unemployment rate in 26 years shakes confidence.

“The numbers are shocking,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, who forecast starts would drop. The decline “represents a payback for the tax credit, which induced builders to build earlier.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=akFBKuUGSnwk&pos=1

[OhioChick]

1. But, but, but things are going so swimmingly. K&R n/t

[FarCenter]

2. Multiple dwelling unit starts have fallen sharply

Comparing Sept '09 with Oct '09, single family is down 6.8% and 5 or more unit starts are down 33.3%.

Comparing Oct '08 with Oct '09, single family is down 10.9% and 5 or more unit starts are down 78.1%.

First, since commercial projects take longer to get going and to finish, it was always expected that multiple dwelling unit buindings would lag single-family homes.

Second, there is no money available for commercial mortgages for residential apartment buildings and condos. These were largely financed by packaging the commerical mortages and peddling them to insurance companies, pension funds, foreign investors, etc. These have all been burned by losses on CMBS, and are not interested in being burned again. Much of the origination was done by small or regional banks, and their balance sheets are not healthy.

[FarCenter]

5. Same story for permits and completions -- apartment and condo construction is tanking

Single family is in way better shape.

[WI_DEM]

3. that sucks, but at least retail sales were up last month higher than expected.

[AllentownJake]

6. That number was padded as well

[ixion]

4. oh yes, it's always "unexpected"

:eyes:

Perhaps if they'd try pulling their head out of their a** they wouldn't be so consistently caught off guard.

[Raineyb]

7. Why unexpected?

Has the job situation improved? No. Although Wall Street doesn't give a tinker's damn about that. So with a large number of people unemployed, others losing their homes due to foreclosure, why would the lack of new starts be a surprise?

What the hell is wrong of these people?

[AllentownJake]

8. They live in a fantasy world centered in two cities

NY and Washington DC.