The drop was smaller than what Wall Street was expecting, Analysts had forecast 950,000. The bad news continue to pound the already hurting housing market, and reflects on the overall economy and employment.
Single family homes starts fell to 641,000 in July, a 2.9% drop from June. Compared to July 2007, new construction fell a staggering 39.2%.
Apartments and multifamily construction plummeted in the same period. The exceptional June 2008 increase was due to a change in New York City building codes.
Forecasts for housing permits in July had them at about 925,000.
They only fell to 937,000, a better than expected figure, but still 17.7% less than June 2008. Permits are an indicator of future construction starts.
No sign of improvement yet from the housing rescue package passed by Congress in July. However builders have high hopes on the new law that grants a $7,500 tax credit for first time homebuyers.
The National Association of Homebuilders’ index is at a low of 16 in August; no change from July. A positive sentiment should start when readings are above 50.
Builders keep some optimism. The measure of their sales expectations for the next six months rose from 23 to 25.
Toll Brothers’ gloomy quarterly results were announced last week, with a 34% drop in revenue and building backlog down 52%. D. R. Horton, Pulte didn’t fare much better in Wall Street with sensible drops in shares values.
Henry B. Nathan is a Florida Licensed Real Estate professional.
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