October 18, 2006

Bubble, Schmubble: Housing Market Indicators Are on the Whole Pretty Positive

Filed under: Economy,Taxes & Government — Tom @ 10:05 am

News about builder confidence, housing starts, and building permits supports a belief that the worst of the housing market’s problems may be behind it, and that the beginnings of a comeback may be in the works.

From CNN Money yesterday –

Home builders’ confidence about the market may have bottomed out.

The builders’ trade group’s survey of their outlook, released Tuesday, ticked up slightly in October for the first time in a year. But their view of the market is still decidedly negative.

The National Association of Home Builders/Wells Fargo Index came in with a reading of 31, up from 30 in September.

Not impressive, but at least in the right direction.

Here’s the very first report from AP today about housing starts and building permits reported by the Commerce Department (small PDF):

Construction of new homes and apartments, which had been falling in the face of a weakening housing market, posted an unexpected increase in September.

The Commerce Department reported that construction rose by 5.9 percent last month to a seasonally adjusted annual rate of 1.772 million units. It was the first increase after three consecutive monthly declines.

Analysts, however, still expect housing to move lower as builders continue to work through record levels of unsold homes. Building permits, a good sign of future activity, fell in September for an eighth consecutive month.

CNN Money says that Analysts had expected a 0.1% 2% decrease (correction based on this registration-required MarketWatch link).

The building permits decline was a seasonally adjusted 6.3%, bigger than an expected 0.1%. Almost 80% of the decline took place in one region, the South.

What all of this tells me is that builders are getting better at adapting to market conditions, and that their ability to adapt is lessening whatever possibility there might have been of a housing bubble.

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Selected Previous Posts:

- Sept. 14 — Bubble, Schmubble (Update)
- Sept. 7 — Unseen Housing Headline: “Home-Price Growth Returning to Normal”
- Sept. 6 — Bubble, Schmubble (So Far)
- June 1, 2006 — Those Waiting for a Housing Bubble Are Going to Have to Keep Waiting
- Dec. 13, 2005 — What About This News Resembles a Bubble Bursting?

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2 Comments

  1. Recall my position: just because the house LOOKS nice, doesn’t mean it’s foundation isn’t rotten:
    http://www.dailyfx.com/story/special_report/special_reports/Watch_What_the_Fed_Watches_1161196805704.html

    Comment by Tracy Coyle — October 19, 2006 @ 9:21 am

  2. My overall take is cautious optimism and crossing all fingers and toes. Lots of homebuilder bankruptcies would be a big problem. I would think Barron’s would have said something about it in their report about 4-6 weeks ago.

    Comment by TBlumer — October 19, 2006 @ 10:35 am

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