So much for Recovery Summer: June’s housing starts fell to the lowest level since October. The reason the end of the $8,000 housing credit. Construction began on 545, 000 homes lower that the estimates of economists and down by 5% in May.
The report show the housing industry will have a hard time returning to pre-crash levels of 2007. A growing level of foreclosures would increase the amount of homes on the market and bring price pressure down.
“Given the excess of existing homes for sale, there is no rush to boost starts significantly,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast a decline in starts to 550,000. “There has been volatility in the data because of the tax credit. The best you can say is the big drag on growth from housing ended a year ago.”
Economists called for housing starts to fall to an annual rate of 577,000 by Bloomberg News housing analysis by 75 reports. The estimates said housing starts would range between 525,000 to 620,000.
New building permits inched up to 586,000 in June up 2.1% mostly do to multifamily properties including apartments, townhouses and condominiums. However, single family homes permits fell 3.4% to 421,000.
Bloomberg News has more.