New home construction at 17-year low

From CNN:

Initial construction of U.S. homes fell to a 17-year low in March, a much
steeper-than-expected drop, according to a government report released Wednesday.

Privately owned housing starts fell to a seasonally adjusted 947,000
annual rate in March, according to the Commerce Department. The rate was down
11.9% from February's revised reading of 1.07 million and 36% lower than March
of 2007.

Economists were expecting housing starts to decline to 1.01
million, according to consensus estimates compiled by Briefing.com.

and

New construction of single-family homes, considered the core of the housing
market, were at a rate of 680,000, or 5.7% below last month's number.
Single-family housing starts have not been this low since May 1980.

Applications for building permits, considered a reliable sign of future
construction activity, fell to a seasonally adjusted annual rate of 927,000 in
March. That's 5.8% below the revised 984,000 rate in February. Economists were
expecting permit applications to fall to 970,000.

Because of the overwhelming glut of housing inventory, both new and existing homes, this is a necessary step in eventually finding the housing bottom. Only when the level of new construction, when combined with existing-homes offered for sale and lender-held REOs drops to a point where it is sustainable by new mortgage issuances will there be a hope of recovery.

Until that time, expect there to be a race to the bottom in prices as homebuilders, home sellers, and REO departments all scramble for the few mortgage loans out there.

Photo: Construction Love, originally uploaded by Ramperto.

Builders: Little Confidence

The latest National Association of Homebuilders market index remained unchanged in April, just shy of its record low for the third consecutive month.

The index, which comes from a survey of residential developers across the country, gauges builders’ perceptions of current conditions, interest from potential buyers, and expectations of sales in the next six months.

Driving the homebuilders’ lack of confidence: tighter lending standards, rising defaults, and fear about the market’s future – all of which have kept buyers on the sidelines.

Investors looking for guidance in the days ahead are well to look to the big homebuilders. While most investors generally are more adaptable to specific market conditions, the overall objective of the typical investor and the large homebuilder is the same: to sell houses.

Sand Castle, originally uploaded by crossmage.

Foreclosures Jump

More bad news from RealtyTrac: foreclosure filings increased 57% in March 2008, compared to last year’s levels. Foreclosures also are up 5% from February, showing that the housing market is continuing to slide.

Leading the nation were Nevada and California. It is Nevada’s 15th consecutive month as the state with the most foreclosures.

Year-to-year, the number of properties repossessed by mortgage lenders has increased 129%.

Georgia is still among the states with the most foreclosures, with only Nevada, California, Florida, Arizona and Colorado with higher foreclosure rates. One in every 351 Georgia households received a foreclosure notice. Georgia also totaled 11,047 homes in foreclosure – the fourth-highest in the nation.

Again, as a lawyer for real estate investors, the story remains the same: investors should plan on these levels of foreclosures continuing for the foreseeable future.

one would., originally uploaded by antimethod (cole rise).

All-time Low for Pending Home Sales

The National Association of Realtor’s February index of pending home sales has fallen to an all-time low, falling 1.9% from January levels. The drop was nearly double what was expected by economists.

Overall, pending sales were down 21.4% from last year’s levels.

The index measures contracts signed, and not actual closings. It is therefore considered a forward-looking indicator of the overall housing market.





Photo: maybe, originally uploaded by Tal Bright.

Snapshot: Atlanta

Courtesy of Radar Logic, a real estate data and analytics company, comes another view of home prices in Atlanta. According to their January 2008 report, released on April 3, prices in Atlanta have fallen 9.2 percent from January 2007 levels.

While this decrease is larger than the 4.8 percent decline shown by last case Case-Shiller report, the point is still the same: that home values throughout Atlanta are falling, and as a real estate lawyer in Atlanta, I certainly recommend that all investors need to take the reduction in home value into account when measuring the potential equity in any property.

Photo: Let Go, originally uploaded by rockmenow48.