Housing Numbers As Cold As The Weather

The housing market can’t catch a break. The Commerce Department released building permit numbers and they continue to drop. Builders have to apply for permits before they can build. If a lot of building is expected, then the permit numbers will rise. It’s considered a good gauge of the temperature of the market. It looks like the temperature is as cold as the weather.

February’s numbers dropped 2.5% making that the 12th decline in the last 13 months. While the actual construction figures for February went up 9%, this seems to be just catching up from a cold January. If you dissect the numbers, it’s not so wonderful. Construction was up 18% in the South and 26% in the West. This is troubling since most of the data has shown that values are dropping in those areas.

Construction was down sharply in the Northeast by 29.7%. That’s the biggest one-month cut since December 1990. But values have held up in the Northeast. So it would seem that builders in the Northeast are quicker to respond to the market changes by curtailing building before the values fall. Construction in the Midwest dropped by 14.4%, following a 16.4% drop in January.

The sub-prime meltdown could have a negative effect on regular homebuyers as banks are expected to tighten up their lending requirements. So, it could be harder for people to qualify for mortgages leaving unsold homes on the market. Plus, if people can’t make their mortgage payments and go into foreclosure, demand will fall even further.

Ultimately, it’s just more confirmation that the housing bubble is officially over.