New Home Construction Falls 10.6%

new home construction

The Department of Commerce reported that new home construction unexpectedly fell 10.6% in October from the previous month to the lowest level since April. The new home starts for October were 31% below the pace a year ago.

This continues to indicate that the bounce seen in new construction activity that occurred between March and July was not the start of an “organic” V-shaped housing recovery but rather an induced bounce brought on by the government homeborrower tax handout which worked to fuel unusually strong seasonal activity (… thus thwarting seasonal adjustment) from pent-up demand sidelined by the epic financial panic at the end of 2008.

There was one bright spot in the data.  Although most regions showed declines to permits with the Northeast declining 4.1%, the Midwest declining 12.2%, the South declining 3.7%,… the West actually registering the first year-over-year gain in permits in 46 consecutive months, a slight move up of 2.13%.

Sorrento Valley real estate