Reports just in from the US Commerce Department state that construction of new homes and apartments dropped 6.1% last month to a seasonally adjusted annual rate of 1.38 million units. That was down 20.9% from the pace of activity a year ago and represents the slowest pace since January 1997.
Builders are slashing prices and throwing in various incentives in an effort to unload record levels of unsold homes. Problems have been worsened by rising home foreclosures, especially in the subprime market, a development which is dumping even more homes onto the glutted market. The current housing slump is the worst since a downturn that occurred during an economic recession in 1990-91. Housing construction fell in all parts of the country except the Midwest which posted a 2.6% increase in July.
The drop in housing construction followed news from the National Association of Realtors that sales of existing homes fell in 41 states in the April-June quarter while one-third of metropolitan areas surveyed experienced price declines. NAR reports that its barometer of builder confidence dipped by 2 points in early August to 22 points, the lowest reading since January 1991 when the country was going through another severe housing downturn.
While this is gloomy news indeed for homeowners and investors alike, there is always opportunity in the marketplace. Investors should always use prudence in their investment decisions, even more importantly so in this type of market. Remember though, from an investors point of view, this is often when you can get your best deals so don't despair!
Go out and look for the opportunity in your marketplace!
Prosperously yours,
Mary Wozny
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