bostonbubble.com

[unlawflcombatnt]

April Housing Starts were MUCH less than predicted. Though a slight increase had been predicted by the "experts," April Housing Starts actually declined significantly. April's 1.849 million annual rate is a decline of 7.4% from March's 1.996 million rate. This is the 3rd consecutive monthly decline in housing starts. The last 3 months' give a cumulative total change of -18%. This is the lowest number of Housing Starts in 17 months. (Briefing.com)
Though the Northeast and Midwest showed increases, these were more than offset by declines in both the South and the West. Below is a graphic representation of the decline in Housing Starts over the last year.


It is also interesting to note the large excess of new home completions vs. New Home Sales. March's annualized new home sale rate was 1.213 million. In contrast, March's annualized new home completion rate was 2.077 million. This is a surplus of new home completions of 864,000 per year.

For March, there were 194,000 new homes completed. In contrast, only 119,000 new homes were sold. This leaves an increase in surplus homes of 75,000 for the month of March alone. This can be seen from the charts below from the U.S. Census Bureau.

New Home Sales



This information can be found at the U.S.Census Bureau site at: http://www.census.gov/const/newressales.pdf


New Home Completions


This information can be found at the U.S.Census Bureau site at: http://www.census.gov/const/quarterly_sales.pdf

The supply of Existing Home is also increasing faster than sales. According to the National Association of Realtors, the supply of existing homes for sale has increased 37.5% since March of 2005.

With a supply of new and existing homes increasing faster than sales, there is nowhere for prices to go but down. And prices ARE declining. Median home prices declined 3.3% during the 1st quarter of 2006, according to CNNMoney article [url=http://money.cnn.com/2006/05/15/real_estate/NAR_firstQ2005_home_prices/index.htm
]Real Estate Cools down[/url]. Median prices fell from $225,300 in the 4th quarter of 2005 down to $217,900 in the 1st quarter of 2006. This quarterly price decline of 3.3% follows a 1% decline during the 4th quarter of 2005, marking to consecutive quarterly price declines. Thus, median home prices have declined 4.3% in the last 6 months.

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