Home builders may have been a little more optimistic in the past month, but they were reluctant to actually put hammer to nail. Housing starts were down 4.1 percent to an annualized rate of 657,000 for the month of December.
Estimates were for around 690k to be the final reading at the end of the year, so 657k is an obvious disappointment. With the full annual numbers in place, 2011 was the worst year on record for single family home construction. Many believe this solidifies the downtrend to further price decline and deterioration. I believe that it’s a good thing homebuilders didn’t build many homes in 2011 because we simply don’t need them!
I’m not good with math, but if you have a glut of tens of thousands (160k to be exact) of pre-owned homes for sale (many vacant), with little or no buyers, prices will generally fall. If you add more homes to that inventory, it’s common sense that this would exacerbate negative price pressure. If it were up to me, I say we STOP building homes and focus on the inventory that lingers on consumers’ and banks’ balance sheets. – Just a thought
This negative data didn’t stop the market’s crawl forward. Futures are still higher this morning, driven by several positive earnings surprises last night as well as a drop in the volatile jobless claims number.
The overall data trends are still mixed, but investors seem to be attracted to the relatively cheap valuations.
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