Housing Starts Rise In April, Exerting Downward Pressure On Home Prices

Housing starts May 2008 - April 2010

Single-family Housing Starts rose by 55,000 last month, suggesting ample housing stock from which North Georgia Mountain Home Buyers can choose this summer.

On a National Level, the report is a slightly larger read than what economists had expected.

Furthermore, for the first time since June 2009, Housing Starts appears to have broken away from its half-million unit plateau. 593,000 new homes were started in April.

Ordinarily, both Wall Street and Main Street would celebrate a strong housing sector report like this, but the Department of Commerce’s press release also held two cautionary notes.

The first point of caution is a mathematical one.  Although single-family starts increased by 10.2 percent, the survey had a Margin of Error of 10.7 percent. This means that Housing Starts may have fallen by 0.5 percent and the report is statistically worthless.

The second point of caution is tied to Building Permits, a complementary data point in the same Department of Commerce report.  In April, Building Permits fell by almost 11 percent with a tiny Margin of Error of less than 2%.  This tells us that builders are pulling back — a sign of low housing market confidence

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Housing Starts, therefore, should ease through June and July.

Home prices are based on housing’s supply and demand.  For the next few months, supply should elevate, helping prices remain suppressed, after which, supply should dwindle.

The best time to buy a home, therefore, may be now.  As the summer months come to close, we may find that buyers vastly outweigh sellers.

On a Local Level here in the North Georgia Mountains, the reports are not as promising.

New Construction Permits Issued In April, 2010

  • Fannin County (16) –  + 33%  Increase
  • Gilmer County ( 15) –  + 25% Increase
  • Towns County    (5) –   – 50% Decrease
  • Union County    (7) –    -57% Decrease

My name is Chad, if I can be of any assistance to you please Contact Me, or give me a call at 706.994.8686. Thank you so much for stopping by “The Porch” for a visit. Please come back often!

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