american housing market close to bottom despite fall in home starts
News Posted On: 19 November 2009
US housing starts dropped an astonishing 10.6% last month compared to the previous month. This, the first time that the indicator has turned negative in 6 months, shows just how fragile the shaky recovery in the US housing market is.
The decline, fuelled by a sharp drop in the construction of multi-family houses and a less severe drop in single-family homes, comes as a shock to Wall Street, which had forecast that house starts would continue climbing.
The US housing market recovery cannot be anything but shaky against the backdrop of continually rising repossession and unemployment figures. It is hardly a coincidence that housing starts were down the month before the government stimulus for the housing market ends.
The US housing market began to turn positive 6 months ago, with reports of price rises from the revered Case-Shiller index, reports of increased and increasing sales, and rises in construction and new home starts.
Though this is the first time the new home starts indicator has turned negative, there have been many blips in the last 6 months, including a fall in home sales 3 months ago, and a shock fall in residential construction also in the last 3-4 months.
Never the less, the consensus of opinion does suggest that the US housing market is close to bottom, with the worst forecast suggesting a further 10% fall in prices. However, we are still likely to be a long way off any real price growth -- excepting on below value purchases.
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