New Home Building Rebounded Slightly in October
The Commerce Department is reporting that the construction of new homes and apartments rebounded in October by the largest amount in eight months but the unexpected increase was not viewed as a signal of a housing turnaround.
The agency reported Tuesday that housing construction rose by 3 percent in October, the first increase after three months of declines and the biggest advance since a 6 percent rise last February.
However, all of the strength came in the volatile apartment sector, which jumped by 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.
The overall increase left construction in October at a seasonally adjusted annual rate of 1.23 million units, down 16.5 percent from activity a year ago during 2006.
Applications for building permits, seen as a good sign of future activity, fell for the fifth straight month in October, dropping by 6.6 percent to an annual rate of 1.178 million units. That is down a sharp 24.5 percent from a year ago.
I think it's pretty clear that until we can clear out the over supply of new homes that are still on the market, we won't start to see a turn around until then. Id say by sometime during the summer of 2008 we will start to see the supply of new homes on the market start to go down as builders continue to offer incentives to buyers and interest rates work down to very attractive levels.