A brighter outlook even when the construction for new homes drops
A brighter outlook for the housing industry is available but not until the labor market comes back to life.
Government sources revealed that the construction of new homes declined in the month of June and this was the lowest in last 8 months. However,
there were certain indicative factors which showed that the activity level for home construction can increase in the coming months.
There was a decline of 5% in housing starts compared to May. The housing starts adjusted seasonally to 549,000 in June. This was the record low to be registered since October 2009. The expectation of the fall was at 575,000. The fall was 5.8% when compared to the stats of June 2009.
This is not a good thing, because the housing industry is severely struggling, because of low sales and low construction activities, though the new constructions were ramped up by the homebuyers’ tax credits; but with the expiration of that program, the problem as reverted back.
A brighter outlook is visible, because of new building permits and some future construction activities. These resulted in some gains in the month of March. This was the first gain ever since the housing crisis began. Permits rose to 586,000 (seasonally adjusted) in June, which was higher than the figures of May (574,000). The hike was 2.1%. However, the June figures were lagging behind the figures recorded in the same month last year. The shortfall was of 2.3%.
Economists believe that the cheap mortgage rates along with cheap homes will be boosting up the housing market, but the possibilities of such boost ups can be realized only when the labor market improves. They opine that a recovery at the present times is a far cry and the only thing that can be forecast is a malaise at augmented levels.
The main reason behind this is the increasing numbers of foreclosures and bank repossessions. This is a positive sign for the prospective homebuyers who can benefit from the discounts offered by the banks on the foreclosed properties.
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