WASHINGTON (AP) -- Construction activity in October plunged by the largest amount since the recession in 2001 as home building fell for a record seventh consecutive month.
The Commerce Department reported that building activity dropped 1 percent to a seasonally adjusted annual rate of $1.18 trillion in October following a 0.8 percent fall in September. It was the biggest decline since a similar 1 percent drop in September 2001, a month when the country was hit by the terrorist attacks as it was mired in a recession.
The new report served to underscore the significant reversal in the fortunes of the housing industry, which had been one of the economy's standout performers as the lowest mortgage rates in four decades pushed sales up to record highs for five straight years.
Demand, however, has cooled this year as buyers have balked at the huge run-up in prices of recent years. Builders have been offering a host of incentives from kitchen upgrades to free swimming pools to move a record backlog of unsold homes.
December 01, 2006
FLASH: October Construction Activity Plunges by Largest Amount Since 2001 Recession
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12 comments:
Ah, the rock and the hard place scenario. Will Ben fight inflation or prop up the housing industry?
Damn future is so hard to predict! Looks like ether way we loose.
The next rate change will be up, not down. Don't kid yourselves! Housing be damned!
The Fed is there to stop inflation and stimulate the economy prior to elections. Since the next election is not for 2 years, the Fed can focus on fighting inflation.
nice rate cuts...REFINANCE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
NOT!
recession coming in 2007!
The Fed cannot lower rates for fear of the dollar falling even more and the rest of the world exerting political pressure on the US to stabilize the dollar. The Fed is out of ammo.
I also see recession coming soon.
Ray
Director - AWAPAC
www.aviationworkersofamerica.org
Don't stop building now, Edgar needs a new McMansion cheap! Two years from now they'll be giving them away. Bwahaha!
Maybe he sold the HD puts at a huge loss. Or maybe he plans to hold until they expire worthless. I would love to know which.
Hey Keith, did you know that stocks and options -- unlike houses -- can and do go to zero?
Looking forward to the next blog entry about Home Depot stock. Go for it, Keith!
MORE
WASHINGTON, D.C. – U.S. home prices rose in the third quarter of this year, but the rate of
increase continued to slow and some areas experienced actual price declines. Nationally,
home prices were 7.73 percent higher in the third quarter of 2006 than they were one year
earlier. Appreciation for the most recent quarter was 0.86 percent, or an annualized rate of
3.45 percent. This reflects a further slowdown from that reported for the second quarter
when the quarterly appreciation rate was 1.3 percent and the annualized rate was 5.1
percent. The quarterly increase is the lowest since the second quarter of 1998. The figures
were released today by OFHEO as part of the House Price Index (HPI), a quarterly report
analyzing housing price appreciation trends.
“Our newest data confirm last quarter’s data that the housing market is in a decidedly
different stage,” said OFHEO Director James B. Lockhart. “With U.S. house prices growing
less than one percent during the third quarter, it provides more evidence that the long-
forecasted national deceleration in house prices is occurring. Given the five-year
appreciation prior to this quarter of 56.8 percent, the slowdown is not unexpected. There
are still some areas where appreciation rates remain very high but now they are the
exception rather than the norm,” Lockhart said.
Since the spring of 2004, year-over-year house price appreciation has fallen from a peak of
13.9 percent to 7.7 percent this quarter. Despite the deceleration, house prices grew faster
over the past year than did prices of non-housing goods and services reflected in the
Consumer Price Index (CPI). CPI prices rose 3.1 percent.
The findings of the third quarter HPI show varying trends in different parts of the country.
1. The quarterly appreciation rate fell in seven of the nine Census Divisions. The West
North Central and East North Central divisions had small increases over weak
second quarters.
2. Five states -- New York, Rhode Island, Michigan, New Hampshire, and
Massachusetts -- saw price declines from the second to the third quarter of the year.
3. Michigan was the first state to show a year-over-year decline in more than six years.
Prices fell in Michigan 0.6 percent between the third quarter of 2005 and the third
quarter of 2006.
4. Appreciation rates remain at or near record-setting rates in areas affected by
Hurricane Katrina. Baton Rouge, Gulfport-Biloxi, and Mobile all had their highest
four-quarter appreciation rates ever with four-quarter price growth of 14.1, 23.3, and
17.5 percent respectively.
5. Idaho now tops all states with the highest four-quarter appreciation rate with prices
17.5 percent higher in the third quarter of 2006 than they were a year earlier. Other
states with still large year-over-year increases were Utah (17.4 percent), Oregon
(16.9 percent), and Arizona (16.4 percent).
6. Quarterly price declines occurred in more than half the cities in California. Fifteen of
25 California cities in OFHEO’s list of ranked Metropolitan Statistical Areas (MSAs)
and Divisions experienced price declines relative to the second quarter.
“House prices continued to rise through the third quarter in most of the country, but generally
at only low or moderate rates,” said OFHEO Chief Economist Patrick Lawler. “The
transition from sizzling markets to normal or weak markets has been orderly so far, and
recent drops in interest rates lessen the likelihood that precipitous changes will occur.”
OFHEO’s House Price Index is published on a quarterly basis and tracks average house
price changes in repeat sales or refinancings of the same single-family properties. Changes
in the mix of data from refinancings and house purchase transactions can affect HPI results.
An index using only purchase price data indicates somewhat less price appreciation for U.S.
houses between the third quarter of 2005 and the third quarter of 2006. That index
increased 6.0 percent, compared with 7.7 percent for the HPI.
OFHEO’s index is based on analysis of data obtained from Fannie Mae and Freddie Mac
from more than 31 million repeat transactions over the past 31 years. OFHEO analyzes the
combined mortgage records of Fannie Mae and Freddie Mac, which form the nation’s
largest database of conventional, conforming mortgage transactions. The conforming loan
limit for mortgages purchased in 2006 is $417,000 and will remain unchanged in 2007 as
announced on November 28.
I'm not anonymous anymore.
and now i can post on the best bong in the world; the housing pancake.
The Fed cannot lower rates for fear of the dollar falling even more and the rest of the world exerting political pressure on the US to stabilize the dollar. The Fed is out of ammo.
_____________
I think the FedGods have to de-value the dollar so the New North American Currency (US, Canada, and Mexico) think Euro, can result. Up until recently, I thought that rates would have to go up on the falling dollar. But, now I think this was planned.
Amero is not an Urban Legend.
Under 80 points, will there be a run on the FOREX?
The construction costs will keep going up,up and up.
Maybe we should use the houses we already have.
According to Richard Daughty, 2.5 percent of homes are sitting vacant.
That is the worst it has been in 50
years.
GTG
http://tinyurl.com/ye8lft
or
http://www.321gold.com/editorials/daughty/daughty112906.html
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