Wall Street may not like it, but lower housing starts is good news for the housing market:
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 529,000. This is 10.6 percent (±8.7%) below
the revised September estimate of 592,000 and is 30.7 percent (±8.3%) below the October 2008 rate of 763,000.Single-family housing starts in October were at a rate of 476,000; this is 6.8 percent (±7.5%)* below the revised September figure of
511,000. The October rate for units in buildings with five units or more was 48,000.
Here’s how one analyst sees the situation: [Thanks L!]
Financial markets had expected starts to rise to 600,000 units. September’s housing starts were revised upwards to a 592,000 unit rate from the previously reported 590,000 units.
"The trickle-down effect of the housing number is going to be amazing," said Dan Cook, senior market analyst at IG Markets, Chicago. "It’s likely that more construction crews will get cut after this, and the supplier who supply those crews will be hurt as well. This is not good news at all."
I see it differently. This is great news. Throwing more inventory on a badly glutted market will never bring about stabilization. Short term this will be painful for the industry. Long term, this is what the market needs- a chance to sell what’s already out there.
