The headline this morning from Yahoo Finance:  [Thanks L!]

New Home Construction Up Last Month

I’ve got to admit, I read that and thought "What in the world are they thinking?"  Then I read the Census report.  I still wonder why builders maintain the level of production they do, but this report at least, shows that they continue to slow:

WASHINGTON (AP) — Construction of new homes and apartments rebounded in October by the largest amount in eight months but the unexpected increase was not viewed as a signal of a housing turnaround.

The Commerce Department reported Tuesday that housing construction rose by 3 percent in October, the first increase after three months of declines and the biggest advance since a 6 percent rise last February.

However, all of the strength came in the volatile apartment sector, which jumped by 44.4 percent. Construction of single-family homes fell for a seventh straight month, declining by 7.3 percent in October compared to September.

Here’s the official wording from the Census Bureau:

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,229,000. This is 3.0 percent (±10.6%)* above the revised September estimate of 1,193,000, but is 16.4 percent (±8.0%) below the revised October 2006 rate of 1,470,000.

Single-family housing starts in October were at a rate of 884,000; this is 7.3 percent (±10.1%)* below the September figure of 954,000. The October rate for units in buildings with five units or more was 312,000.

So the rise was in the more volatile month-to-month, and within the margin of error.  Year over year we are obviously looking at a decline, particularly for single family homes.

[Graph from U.S. Census Bureau- sorry about the resolution, but I start getting complaints from readers when images are over 600 pixels.]

In many areas of the country, the continued production of new homes is adding fuel to the foreclosure fire.  Every drop we see then of any sort, is a relief for a thoroughly saturated market.