October data for new US housing starts and purchases has come out and the results are a mixed bag. In reality, it’s not unexpected. There are far too many problems than improvements with the current American economy. Although the upside of the nation as a whole is high, they are frankly stuck. The people who can make a difference are lawmakers and they perhaps the source to the stagnant economy. With Barak Obama retaining reigns of the White House, it could translate into another stalled Congress for another 4 years as cranky Republicans roadblock economic decisions (and others for that matter) at every turn.
The reflection into crucial areas of the economy is evident. There is marginal gains but generally what we observe is one step forward and one step back for little to no net gain. October data for US housing starts was just that, one step forward, one step back.
However, with additional supply in the market, sales in fact dropped 0.3 percent to a 368,000 annual pace following a 369,000 rate in September that was 20,000 lower than initially reported. The median estimate of 74 economists surveyed by Bloomberg projected a 390,000 pace.
Conversely, housing starts increased 3.6 per cent to a seasonally adjusted annual rate of 894,000 units – the highest since July 2008.
The silver lining, if there is any, is there doesn’t seem to be mounting concern, everything seems to be stuck in a pattern of below average mediocrity. What the American economy needs is consistent above average mediocrity that’s indicative of a growing snowball of positive economic data.
With notes from Calgary real estate lawyer T Taylor.
Calling the home buying we have seen in both the new and existing markets “pent up demand” may be a stretch, many houses still remain empty or under leased, this means the occupants are not fulfilling their obligations. With population growth slowing, values changing, and a slightly more occupants per home, less houses will be needed. Some of what we are currently witnessing is a repositioning and refinancing at historically low rates. In coming quarters do not expect housing to lift the GDP as much as it has recently since figures are based on a year over year performance and the home-builders have harvested the low hanging fruit.
This is the message I communicated in a January 13th post on my blog;