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Friday, October 23, 2009
Housing Starts on single-family homes gained last month, marking the 8th time that's happened this year.
A "Housing Start" is a home for which the foundation has been excavated and, considered alongside other key market metrics, September data suggests that the housing market stabilization is complete.
Momentum in housing is overwhelmingly positive:
- Homes under contract are soaring
- National home supplies are way down
- Home values are up in a lot of markets
Despite the positive news, the press is calling September's Housing Starts data a "bummer". Citing a drop in monthly building permits, the media purports that housing will slow in the months ahead.
The conclusion may be right, but the rationale may be wrong.
The probable cause for fewer permits isn't that the housing market is overdone. It's that home builders are choosing to exercise caution given the pending expiration of the First-Time Home Buyer Tax Credit and a still-growing number of foreclosed homes.
It's unclear what housing demand will be beginning in December and the last present a builder wants for the holidays is an excess of inventory.
It makes sense that building permits are down, in other words.
Looking back at February of this year, there's a host of signs that housing is on the path to recovery. Now, that path won't be a straight line and there's bound to be setbacks, but September's Housing Starts is not one of them.
Housing Starts are up 40 percent on the year.