Housing Starts

Can Housing Expand Even After The Tax Credit Expires?

After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.

It’s yet another signal that the housing market nationwide is stabilized.

A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.

This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too.

Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.

Housing permits are an important data point in housing because permits are precursors to actual housing starts.  According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.

This, too, reflects well on housing in Northwest Indiana because the federal home buyer tax credit won’t be in existence this summer. The simple fact that homes are being built now shows that housing in Northwest Indiana is likely to expand even after the tax credit expires.

Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Housing Starts

Housing Starts Steady and It’s Influence on Home Prices

Single-family Housing Starts idled last month, dropping just 3,000 units from the month prior, or 0.2%.

According to the Commerce Department’s report, February marked the 8th straight month in which Housing Starts straddled the half-million marker, dating back to June 2009.

This is a different slant on the Housing Starts story as told by the press.

Most publications are reporting that Housing Starts fell 5.9 percent in February. Technically, this is true.  Housing Starts did fall 5.9 percent last month.  However, the Housing Starts data is comprised of three parts:

1. Single-Family Housing Starts
2. 2-4 Unit Housing Starts
3. “Apartment Building” Housing Starts (i.e. 5 or more units)

The press tends to lump all 3 together but that’s not relevant for everyday homeowners and buyers. 

2-4 unit homes, and apartments and condos are a different housing class as compared to single-family homes and are notoriously volatile, too.  Single-family starts are more steady and better reflect the country’s housing stock.

Single-family housing starts are up 32 percent over the last 12 months. 

Meanwhile, the pace of new buyers has not kept up with the pace of new housing stock. Therefore, because home prices are based on supply-and-demand, the price for a newly-built home was down, on average, 7 percent nationwide in January.

With the federal home buyer tax credit expiring soon, home buyers will likely create new demand for homes. And with Housing Starts holding steady near 500,000, that should push prices higher through the spring months.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Housing Starts

Don’t Be Fooled by The Recent High in Housing Starts

Sometimes, headlines for housing can be misleading and this week gave us a terrific example.

On Wednesday, the Commerce Department released its Housing Starts data for January 2010. The data showed starts at a 6-month high.

A “Housing Start” is a privately-owned home on which construction has started.

Headlines on the Housing Starts story included:

• U.S. Housing Starts Hit 6-Month High (Reuters)
• U.S. Economy Receives Home Building Boost (Shepparton)
• Housing Starts Post Sharp Rebound (ABC)

Based on the headlines, the housing market looks poised for rapid growth through the Spring Market in Chesterton, Crown Point, Highland, Munster, Portage, Saint John, Schererville and Valparaiso.

The real story, though, is that although Housing Starts increased by close to 3 percent last month, the growth is mostly attributed to buildings with 5 or more units.  This includes apartments and condominiums — a sector of the housing market that’s notoriously volatile.

If we isolate Housing Starts for single-family homes only, we see that starts grew by just 7,000 units last month and have failed to break a range since June 2009.  January’s tally is slightly below the 8-month average.

Perhaps more interesting than the Housing Starts, though, is the Commerce Department’s accompanying data for Housing Permits. After a 5-month plateau that ended in November, Housing Permits posted multi-year highs for the second straight month.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

One reason permits are up is that home builders want to capitalize on the federal homebuyer tax credit’s dwindling time frame.  Sales are expected to spike in March and April and more homes will come online to deal with that demand.  Home buyers should shop carefully, but with an eye on the clock.

As the tax credit’s April 30, 2010 deadline approaches, competition for homes may be fierce.

Contact James K Barath in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Housing Starts

Housing Starts Down Now, But Housing Permits Heat Up

A “Housing Start” is a privately-owned home on which construction has started. It’s an important gauge of housing health because it tracks new housing stock nationwide.

In December 2009, starts fell by nearly 7 percent.

The news is mildly disappointing but not too bad. The likely cause for the Housing Starts drop is December’s rough weather conditions. It’s tough to break ground when Mother Nature won’t coordinate and last month was especially hazardous in Northwest Indiana for the communities of Chesterton and Valparaiso.

More cheery, however, is that for the second straight month, Housing Permits exploded. 

A housing permit is a certification from local government that authorizes construction. After posting a 7 percent gain in November, permits rose by another 8 percent in December.

It’s a signal that housing is, indeed, in recovery — despite the falling number of actual starts. More permits mean that builders plan to bring more homes to Crown Point, Portage, Saint John and Schererville for what’s expected to be a very busy spring home-shopping season.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.  Therefore, Housing Starts should start rising soon anyway.

For home buyers in Northwest Indiana, the news couldn’t be better. 

With more homes coming online, competition among home sellers in  Highland and Munster should increase, and that will suppress the rise in home prices nationwide. 

It’s basic economics.  When home supplies grow faster than home demand, prices fall.

Contact Benchmark Mortgage in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!

Housing Starts

Caution Home Sellers, Housing Starts & Permits Jump

Housing Starts jumped last month as builders got back to business.  It’s a telling sign for the economy, but bad news for next season’s sellers.

With more homes coming online, home prices may be slow to rise nationwide.

A “Housing Start” is a privately-owned home on which construction has started. In November, starts rose by nearly 9 percent while remaining within the same tight range we’ve seen since June.

More interesting than Housing Starts, though, is the accompanying data for Housing Permits. After a 5-month plateau, Housing Permits finally broke through, posting its largest number in 12 months.

This, too, bodes poorly for sellers.

Housing permits are precursors to housing starts so because the number of permits are higher today, we expect that the number of starts will be higher just a few months from now.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

More permits means more starts which, in turn, leads to a larger home inventory. And when home supplies grow faster than the home demand, prices fall.

Throughout the early part of 2010, low mortgage rates and federal tax credits should help hold demand high but if builders flood the market with new, quality product, sellers may find that they’ve lost some of their leverage.

For home buyers, the rise in starts is welcomed.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Housing Starts

Hooray for Sellers as Housing Starts Down Again.

A “Housing Start” is a home on which construction has started and, for the 4th straight month, national single-family housing starts held steady last month. 

When the demand for homes grows faster than the number of homes for sale, prices increase. 

As recent home sales data confirms, buyers currently outpace sellers and one consequence of this is an increase in multiple-offer situations this year. 

It’s no wonder home prices are up across so many neighborhoods.

October’s Housing Starts report is yet another piece of housing data foreshadowing rising home prices into 2010.

Building Permits were also down in October, a potential demand-to-supply imbalance magnifier. Without permits, there’s no future construction. This drains supply. Meanwhile, tax breaks and low rates tend to stimulate demand and, right now, we’ve got both. 

Therefore, so long as demand remains semi-constant into the New Year, expect home prices to rise. 

In many markets, they already are.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Housing Starts

Housing Starts Rise In 8 Months Out Of 9 This Year

Housing Starts

Housing Starts Slip, But Don’t Think The Recovery’s Been Halted

Housing Starts on single-family homes took a step backwards last month, falling month-over-month for the first time since January.

A “housing start” is new home on which construction has started.

Don’t let the slowdown fool you, however – the housing market’s recovery is still very much underway.

• Sales volume is up in most cities
• Home values are up in most places
• Low mortgage rates are making homes affordable

Builders were bound to take a construction breather sometime - especially with the looming expiration of the First Time Home Buyer Tax Credit.  The last thing they want is to be saddled with excess supply.

Some of the news coverage categorized August’s Housing Starts as troubling.  That’s likely overstating it.  One down month after 8 consecutive increases is not only acceptable, but it’s expected, too. 

Single-family starts are up 34 percent on the year.  The housing market is recovering just fine.

Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.

Housing Starts

If Builders Are Building, It’s Got To Be A Good Sign

Single-family Housing Starts rose for the 4th straight month in July, another sign that the battered housing market may be making its comeback.

“Housing starts” are new homes on which construction has recently started. 

Not surprising, in a related story, homebuilder confidence moved to a 12-month high.

Ironically, an increase in newly-built homes could actually slow a nationwide housing rebound because values are driven by supply and demand. More in-the-pipeline supply means that buyer demand has to stay strong or else prices will eventually fall.

So far this year, though, demand has kept pace. 

Over the past 6 months, the combination of low mortgage rates, aggressive home valuations, and federal and state tax credits has kept buyer activity up and home values on the rise.

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