Breaking: Housing construction plunged to the second lowest level on record in March

[RB TexLa]

March housing construction falls 10.8 percent

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 22 mins ago
WASHINGTON – Housing construction plunged to the second lowest level on record in March, providing a sobering sign that the worst housing slump in decades has not yet ended.

The Commerce Department said Thursday construction of new homes and apartments dropped by 10.8 percent last month to a seasonally adjusted annual rate of 510,000 units. That was the second lowest construction pace in records that go back 50 years.

The decline was worse than economists had expected and February activity was revised lower as well. That is more evidence that the steep slump in housing, which was a major factor triggering the current recession, has yet to run its course.

The report showed that applications for building permits, considered a good barometer of future activity, also fell in March, dropping 9 percent to an annual rate of 513,000 units. That was lower than the 550,000 rate that economists had been expecting.


http://news.yahoo.com/s/ap/20090416/ap_on_bi_go_ec_fi/housing_5

[customerserviceguy]

1. Not much of a surprise

we still have plenty of housing stock out there on the market, the ghost inventory of foreclosed homes is staggering. I would imagine that with the credit crunch, it has been essentially impossible for builders to borrow money to build spec homes in this current economic environment.

It's a part of the housing market finding the bottom. We don't turn around out of this mess until that happens.

[Warpy]

2. Here it's an oversupply of the wrong kind of housing

McMansion type houses were overbuilt during the years 2001-2006 to satisfy largely out of state speculators who were snapping up a third of all new construction and a much higher percentage of the yuppie barns. Because they were slapping these things up so quickly, we never did see any sort of appreciation here and are now stuck with a massive oversupply of "executive homes" and an undersupply of starter houses.

The credit crunch isn't the problem. With the job outlook so uncertain for nearly all of us, few are willing to take on mortgages or even shorter term debt. It's not that they're not lending, it's that we're simply in no mood to borrow more.

I'm afraid that's a lesson that won't be unlearned for at least another generation: income might be temporary but debt is forever. The days of building a thriving consumer economy on easy access to debt are over. It was unsustainable from the beginning and has now completely run out of gas.