New housing starts fall 10.6% in April

Via Hot Air:

The housing market continues to decline sharply, according to the latest figures on new housing starts and residential building permits. The Census Bureau reported today that the annualized rate of new residential starts dropped over 10 points from March to April, and that single-family starts dropped 5.1%. Permit applications also declined by 4%, which indicates that no one sees much hope for renewed demand in the market:

Reuters:

Housing starts and permits for future home construction fell in April as an overhang of homes on the market discourages builders from taking on new projects, pointing to prolonged weakness in the housing sector.

The Commerce Department said on Tuesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 523,000 units. March’s starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units.

Economists polled by Reuters had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9 percent, the largest decline since October 2009.

Residential construction is being crowded out by an oversupply of used homes on the market, in particular, foreclosed properties, which sell well below their value.

What this typically ignorant journalist is trying to say is that many existing homes are selling below their replacement cost and new construction doesn't pencil out at that price point.

As inflation worms its way into the broader economy, construction costs will rise but wont translate into higher prices for new or existing homes due to an over supply that will not be absorbed any time soon.

We are now entering the summer construction season when industry employment typically rises. Based on this data, that's not going to happen this year and will likely go down